The Provincial Treasury Departmental Budget Speech presented by MEC For Finance, Motlalepula Rosho at the North West Provincial Legislature On 3rd June 2021
Honourable Speaker, Ms. S.R. Daantjie
Honourable Deputy Speaker, Ms. Viola Motsumi
Honourable Premier, Prof T.J. Mokgoro
Honourable Members of the Executive Council
Honourable Members of the Provincial Legislature
Executive Mayors and Mayors of Municipalities
Modulasetilo wa Ntlo ya Dikgosi, Kgosi Moshe Mabe
Chairpersons and Board Members of Public Entities
Administrators,
Heads of Departments and CEO’s of State-Owned
Entities Distinguished Guests,
Bagaetsho, Dumelang
“Does rough weather choose men over women? Does the sun beat on men, having women nice and cool?”
Honourable Speaker this is a quote from the author, poet, literature expert and one of the founding fathers of African Literature in Post¬ Colonial Africa, Ngugi wa Thiongo, as he averred in his book titled Wizard of The Crow. Wa Thiongo was posing this question through a fictional character in the book named Nyawira to drive home the point that women always bear the brunt of poverty.
As we commemorate the great daughter of the soil, Mama Charlotte Maxeke throughout this year, it is befitting that we also celebrate the contribution made by women of the world, both past and present in their continued efforts to make the world a better place.
Honourable Speaker, we need to celebrate our sheroes who so gallantly spearheaded the cause of women’s emancipation and in the process leaving us a strong legacy to carry forward the task meant to lead to the realization of a better life for all. These women were not isolated from the people. They felt everyone’s pain, shared the dreams, and drew strength and wisdom from fellow human beings.
I am speaking about heroines such as Lillian Ngoyi, Gertrude Shope, Sophia De Bruyn, Ruth Segomotsi Mompati, Rita Nzanga, Winnie Madikizela-Mandela, Albertina Sisulu, Adelaide Tambe and many others who played and still play a role in the development of our people and country. In their different fights and display of strength, their vision was common, it was that of having a better South Africa for all. Their efforts have built an impetus for us to be able to fight the injustices such as gender-based violence, unemployment and poverty.
Honourable Speaker, collectively throughout their lives, these gallant leaders have engaged in patriotic rendezvous on behalf of the indigenous inhabitants of Africa, which efforts culminated in unexpected and extraordinary results every time. Their conviction to the struggle has been the redemption of all womanhood as well as humanity in general. Through their sacrifices, our fallen leaders have created a platform of reference for us to be able to draw strength during times of need or crisis such as the challenging period we are faced with now.
Mmusakgotla, baa ba robetseng ba lwela kgololosego le makgwakgwa a botshelo, ba re segetse motlhala le tsela ya gore fa go le thata, go le letobo, re gakologelwe gore ba ne ba tshelela eng, mme re bone tharabololo ya masaikategang a matshelo a rona.
Fa re bona okare mpuru o a farelwa, padi ya matshelo a bagaka ba rona e tlisa tsholofelo le monyebo mo dipelong tsa rona, mme seno se re neela maatla a go lwana fa sera se re tlhasetse.
Honourable Speaker, this budget speech comes amidst the third wave of infections of the coronavirus. This virus is threatening the survival of humankind and continues to deepen economies worldwide to a point of almost collapse. We need collective efforts to map a new developmental trajectory and agenda of social transformation to minimize the inequality widened by the pandemic. We are therefore compelled to intensify our efforts to promote non-pharmaceutical preventative measures of social distancing, washing or sanitizing of hands and continuous wearing of facial masks.
As we continue the fight against the coronavirus, the legacy left by our heroines compels us to be selfless and continue to increase aid to the needy in order to assist them to cope socially and economically during this time of need. Prioritizing the wellbeing of our people therefore remains critical for rebuilding our nation’s strength. Should we succeed, we will have more freedom, more confidence and much more control over our own lives.
Economic outlook
Honourable Speaker, the global economic recovery is stronger than previously forecasted but as can be expected, not all countries are recovering at the same rate. The IMF April World Economic Outlook Report for 2021 has forecasted a global growth of 6.0 per cent. The IMF has projected a growth for Sub-Saharan Africa of 3.4 per cent for 2021 and 4 per cent for 2022.
Looking at the South African economy, sectoral recovery shows to be underway with agriculture being the only sector that has showed growth for four consecutive quarters. The economy remains smaller than it was in 2019. As much as the recovery prospects look promising, many risks remain, central to which would be the ongoing COVID-19 pandemic locally. The third wave has resulted in government imposing stricter lockdown conditions and moved the country to adjusted level 2.
Gross National Expenditure, which is another measure of the national economy has declined by 5.4 per cent which caused, among others, household disposable income to decline by almost five per cent resulting in 5.8 per cent reduction of overall household consumption expenditure in 2020. Consumer credit worthiness has been eroded. Close to 70 per cent of people who applied for loans since the outbreak of the virus are rejected outright in comparison to just below 50 per cent before the outbreak of the virus.
Honourable Speaker, the residents of the province are reeling from the ravages of COVID-19. Managing the spread of the virus through forced lockdown restrictions has resulted in serious economic implications and has impacted negatively on the daily lives of our people across sectors of the provincial economy. Although there are signs of recovery, it is believed that there is a need for special attention on the tourism sector which was the worst affected by the pandemic.
Covid-19: Departmental response efforts
Honourable Speaker, the department developed the COVID-19 Response Plan which has been aligned to the different risk adjusted alert levels of the country.
This plan is in line with the National Health COVID-19 Regulations and Department of Public Services Administration (DPSA) directives. A Compliance Officer has been appointed and the Departmental Occupational Health and Safety (OHS) Committee was revised. The Safety Health Risk and Quality Management (SHERQ) policy was revised to cater for COVID-19. Standard Operating Procedures (SOP’s) were developed to enhance compliance to COVID-19 health protocols and assist in containing the spread of the pandemic.
Relevant information was submitted to Chief Inspector of Department of Labour in adherence to prescripts/ legislation regulating COVID-19. The Department further shared the developed documents with sister Departments in the Garona Government Building to assist them to adhere to legislation as well as to ensure the shared office space premises remains safe.
Honourable Speaker, the labour unions form part of the occupational health and safety committees and have been actively engaged in ensuring a safe work environment. They have also assisted in communicating the mandatory adherence to the non-pharmaceutical COVID-19 preventative measures and adherence to all health protocols. The department further conducted the COVID-19 risk assessment and implemented the treatment plans which are monitored monthly through the Occupational Health and Safety Committee, Risk Management Committee and Departmental Management Committee (DMC).
The Department further developed the COVID-19 Communication Strategy to communicate efforts implemented towards informing, educating, and transferring key messages to ensure a healthy and safe working environment.
Reflection and progress on 2020121
Honourable Speaker, the material governance shortcomings in the local government sphere has resulted in municipalities not being able to appreciate, embrace, absorb and internalize the support and capacity building measures provided by the Provincial Treasury. This has further dampened the state of municipal financial health, resulting in the current negative audit outcomes and poor financial management that we continue to experience and witness.
Mmusakgotla, tsamaiso ya pusoselegae ya rona e phutlhame. There is no contestation, our municipalities are operating under severe financial crisis and this calls for urgent and intensified action to be taken to avoid a total collapse of our municipalities. Section 139(5) of the Constitution read together with chapter 13 of the Municipal Finance Management Act (MFMA) mandates the Provincial Government to intervene in those Municipalities that have been identified to be operating under severe financial crisis.
The Provincial Treasury in collaboration with the Department of Cooperative Governance and Traditional Affairs has developed the roadmap that details specific mandatory interventions that will be implemented in municipalities operating under severe financial crisis. In our efforts to turnaround the current situation in our municipalities, to date the following milestones have been achieved:
• A financial health assessment was conducted on identified municipalities operating under financial crisis as per the provisions of the Municipal Finance Management Act;
• Consultative sessions were held with Mayors of Municipalities, National and Provincial Department of Cooperative Governance and Traditional Affairs (CoGTA) as well as National Treasury, focusing on municipalities that have been operating under financial crisis;
• Support from the Minister of Finance through the National Treasury’s Municipal Finance Recovery Services (MFRS) has also been secured for the implementation of mandatory interventions;
• Participation in the National Treasury’s Municipal Finance Recovery Services Roadshow wherein the Deputy Minister of Finance, Dr David Masondo and Deputy Minister of CoGTA, Mr Obed Bapela presented the implementation of mandatory interventions to the Executive Council.
Other notable achievements by the Provincial Treasury realised during the 2020/21 financial year relate to the following:
• Maintaining of a clean audit opinion for the seventh year in succession;
• The department, in collaboration with National Treasury, developed a North West Provincial Contract Management Policy Framework. The Policy Framework was implemented with effect from 1st April 2020 and is aimed at ensuring uniformity of contract management within Departments and Public Entities. The department will continue to monitor the full implementation of the Policy Framework in the current financial year;
• Supply Chain Management prescripts in relation to COVID-19 emergency procurement were issued to departments and public entities in order to support and guide them on procurement conditions that are applicable to the Personal Protective Equipment (PPE) items;
• At the height of the COVID-19 pandemic in 2020/2021 financial year, the provincial departments managed to spend R4.2 billion or 43 per cent within the province out of the total procurable spend of R9.7 billion. Three and a half billion rands (R3.5 billion) was spent on enterprises whose majority shareholding (i.e. 50 per cent) and more is owned by black people within the province;
• Sixty-eight (68) internships and sixteen (16) learnerships (11 unemployed and 5 employed) were rolled out in the quest to address youth unemployment and contribute to the skills base of the province;
• Provincial Departments’ audit outcomes improved from five (5) unqualified opinions during 2018/19 financial year to eight (8) unqualified during the 2019/20 financial year. The audit outcomes for public entities remained the same without any improvement, indicating a need for more capacitation in the coming financial years;
• For the year under review, 213 internal audit assurance and advisory reports were issued to departments. Based on the internal audit work performed, recommendations have been made to departments to focus on the improvement of the effectiveness of risk management, governance, and internal control processes;
• Four (4) Departments together with the North West Provincial Legislature were identified for clean audit and are currently undergoing 100% verification of all procurement documentation to identify gaps that could be corrected by management;
• Capacity building and training were provided continuously in the form of virtual workshops, telephonic support, reviewing of interim and annual financial statements by the Office of the Provincial Accountant General and Provincial Internal Audit for combined assurance. This was done with the aim of improving the quality of financial statements submitted to the Auditor General of South Africa;
• The Provincial Treasury has surpassed the revenue target by collecting R227 million against the target of R150 million for the 2020/21 financial year. This will augment the declining provincial equitable shares and allow funding of critical service delivery priorities.
Plans for 2021/22
Honourable Speaker, we would like to propose the following budget structure to fund our plans for the current financial year and as we proceed with this presentation, we will outline some of the plans that relate to this proposed allocation.
2021/22 budget allocation per programme
PROGRAMME R’OOO
Administration 163 265
Sustainable resource Management 127 052
Assets and Liabilities Management 56 468
Financial Governance 162 514
TOTAL 509 299
Capacitation of new Councillors
Honourable Speaker, the President has pronounced the 2?1h October 2021 as the date for Local Government Elections wherein the new political leadership in the local government sphere will be elected. Councillors are the most important component of this sphere as the executive and legislative powers of municipalities are vested on them.
Municipal councils are the ultimate backbone of governance that exercise oversight to ensure that the incoming administrations executes its executive functions. Resultantly, the Provincial Treasury in collaboration with CoGTA and SALGA will be providing extensive and comprehensive training on sound financial management principles to the newly elected councillors. This capacity building initiative will be geared towards ensuring that the newly elected councillors acquire in-depth knowledge and understanding of key financial management elements that should enhance their oversight role and accountability of the incoming administrations.
Capacity building in Municipalities
Honourable speaker, the Provincial Treasury is expected to support and assist municipalities in building their capacity for efficient, effective and transparent financial management in line with section 154 of the Constitution read together with section 34 of the Municipal Finance Management Act.
In recognition of the contribution made by the youth of 1976 in the struggle against apartheid, the month of June has been set aside as a commemorative one focusing on youth development programmes. As we commence with the commemoration of the youth month, the Provincial Treasury will be rolling out the Charlotte Maxeke learnership programme during the second quarter. The learnership programme will target fifty (50) unemployed matriculated youth who will undergo extensive training in municipal financial management for a period of three years.
This learnership is aimed at creating a pool of qualified and experienced municipal finance personnel who will be available for both municipalities and the provincial government to be deployed in addressing capacity challenges.
District Development Model
Cabinet led by President Ramaphosa has adopted the concept of the District Development Model (DOM) which seeks to integrate planning, execution and delivery of government policy across all three spheres at district level. In contributing towards this model, the Provincial Treasury has aligned its municipal support structure to dovetail into the DOM wherein resources will be deployed at district level. The Provincial Treasury has commenced with the implementation of the strategy to strengthen the functionality and capacity of the district shared services with the main focus on financial governance.
Budgetary support, Infrastructure planning and delivery
Honourable Speaker, in the quest to assist departments to improve on infrastructure planning and delivery, the Provincial Treasury will continue to perform the following amongst others:
• Conduct training on Infrastructure Delivery Management System Body of Knowledge (IDMSBOK) techniques with the aim of introducing and implementing the Knowledge Circles;
• Provide training on Budget Facility for Infrastructure (additional funding tool) which allows departments to submit a comprehensive project proposal for large capital projects that requires sourcing alternative funding;
• Resuscitation of an Infrastructure Support Forum (ISF) to improve planning, delivery and monitoring of infrastructure within the Province;
• Strengthening of oversight on projects that are struggling to reach the final completion stages;
• Review of the structure within Provincial Treasury Infrastructure management unit to strengthen the oversight role on planning and delivery of infrastructure projects as tabled in the budget statement;
• Ensure that departments put more focus on the maintenance of existing facilities and reduce the construction of new and unnecessary facilities. This will safeguard the existing immovable assets and ensure that facilities reach the intended useful life;
• Pursue the delivery of the critical infrastructure through the utilisation of Public Private Partnership (PPP);
Utilisation of alternative building materials in infrastructure projects
Honourable Speaker, the cost of constructing new infrastructure in the country has risen sharply to the extent that it is now becoming unaffordable. It is against this background that Provincial Treasury saw it fit to request proposals from service providers on the use of alternative building/construction materials to ensure that the provincial budget is more efficiently deployed to accommodate more priorities.
The Provincial Treasury is responsible for facilitation of transversal contracts in line with Treasury Regulation 16A6.5. Resultantly, the department will coordinate the process of creating a database for alternative building materials from prospective suppliers and the Department of Public Works and Roads will be a lead specialist in this initiative for the utilisation of the database by all the departments.
Honourable Speaker, we remain committed to supporting and guiding departments and public entities in spending their allocated resources in a manner that promotes good governance and enhances service delivery. The financial sustainability of our public entities remains at high risk and this in turn also puts a risk on the provincial fiscal framework.
Most of our entities continue to struggle to meet their financial obligations and eventually are forced to request bailouts from the provincial fiscus. It is against this backdrop that the Provincial Treasury will strengthen its oversight and monitoring role to advise and provide guidance with the objective of improving financial management in this sector. In this regard, the Provincial Treasury will pilot the publication of the Estimates of Provincial Expenditure and Revenue for Public Entities (EPRE).
The EPRE is an important reference document to keep government, including public entities accountable and ensures that expenditure of public funds achieves its intended policy outcomes of improving the welfare of citizens. Sound financial management alone will not improve the level of service delivery by public entities. It is equally important to ensure that the governance structures of our entities are efficient and effective. To this end, we call upon all departments responsible for public entities to improve their monitoring and oversight role and ensure that the governance challenges are addressed as a matter of urgency.
Section 100 Intervention
Honourable Speaker, the Provincial Treasury was placed under Section 100(1)(a) intervention in 2018 by National Government. The then Minister of Finance, issued 25 Directives to the Provincial Treasury for implementation.
It is encouraging to indicate that all directives, with exception of those that had to be implemented in collaboration with the National Treasury have been concluded. Directives which are still in progress mainly relate to issues of irregular expenditure.
Provincial Treasury has commenced with the implementation of the roadmap towards reduction of irregular expenditure in departments and entities. Accountability remains key to the successful implementation of this roadmap as emphasis will be placed on consequence management. The roadmap entails introduction of preventative, detective and corrective controls to avert irregularities from occurring. Through this roadmap, effective from June 2021, we will be fast-tracking the assessments and facilitation of the condoning process jointly with National Treasury.
Procurement initiatives
Honourable Speaker, to enhance the procurement spend within the province, as was alluded in the 2021 Provincial Budget Speech, the Provincial Treasury is embarking on the following processes: –
• Development and implementation of a Provincial Preferential Procurement Policy Framework (PPPPF) in line with the section 217 of the Constitution of South Africa and the Preferential Procurement Policy Framework Act. The policy will clearly articulate how SMME’s owned by designated groups will be empowered through making provision for 30 per cent of procurement spend on goods and services earmarked for designated groups. Fifteen (15) per cent will benefit women, 10 per cent will be targeted at youth and 5 per cent earmarked for people living with disabilities;
• The Provincial Treasury will introduce a Provincial Instruction Note to departments and their entities on standardising Bid Specification Committee Agendas which will ensure consideration by organ of state of 30 per cent sub-contracting where feasible, including pre¬ qualification criteria targeting designated groups in every bid that will be issued.
Support to Departments and Entities
Honourable Speaker, the state of governance at provincial public entities is of great concern. The situation requires critical intervention as a matter of urgency. Most of the public entities do not have substantive Accounting Authorities and Chief Executive Officers (CEO’s) which compromise the long -term planning and achievement of the mandates of these entities. There are no substantitive Chief Financial Officers to administer the financial management affairs of these entities as most are in acting capacity.
Improvement of the financial sustainability of public entities depends on the extent to which sound governance systems are adhered to. To address these challenges, Provincial Treasury will be working with Office of the Premier and responsible departments for entities in putting measures in place to bring a turnaround around this critical area. Through the Office of the Provincial Accountant General, we will continue to provide support to all Provincial Public Entities on accounting related matters and audit issues. All public entities will be required to develop Post Audit Action Plans (PAAP) which will be monitored by Provincial Treasury for improved audit outcomes.
Honourable Speaker, the Provincial Internal Audit’s work will be focused on reviewing the adequacy and effectiveness of post audit action plans and risk management systems. These two (2) systems are critical enablers, which should be levered to their maximum potential for improvement towards clean administration and the achievement of service delivery objectives.
Provincial Internal Audit will also provide advisory services to departments on the establishment of combined assurance systems, which represents a coordinated approach to ensure that all assurance activities provided by management, internal and external assurance providers adequately and effectively address significant risks facing the organisations and that suitable controls exist to mitigate the risks. The audit of bids in excess of R10 million prior to award will be continued in the current financial year.
Honourable Speaker, the Department will continue to intensify the following human resource capacity development programmes:
• Filling of the critical vacant funded positions and assist in the reduction of youth unemployment through internships and learnerships;
• Adherence to COVID-19 protocols and directives with the intention of preserving lives of our employees as well as provision of necessary PPE’s;
• Efforts will be strengthened to assist in the mass vaccination campaign through vaccination advocacy sessions and aiding registration for vaccination where required.
In conclusion
Honourable Speaker, globally all focus has shifted to coronavirus and governments are trying relentlessly to mitigate the negative effects of this invisible enemy. The pandemic has challenged families, communities, and governments to think outside the box with regards to unearthing survival tactics. There is no doubt about the severity of the crisis we are facing. Our inherent ability to manage this crisis and overcome related challenges has allowed us to let go of life as we know it, in order to save our lives and the livelihoods of those around us.
Today, as we confront this pandemic, we are strengthened by our history of the fight and subsequent victory against oppression under a brutal regime of apartheid. Our triumph over that dehumanising system must remind us that even when problems seem insurmountable, change is always possible. Let us take a moment to reflect on the concerted effort of everyone globally working hard to end this scourge .
Honourable Speaker, we should be encouraged by what Mama Charlotte Maxeke accomplished as a pioneer of the greatest human cause, working under extraordinarily difficult circumstances in the face of prejudice and adversity to lead our people. The fight against coronavirus presents an opportunity for us to rekindle our sense of unity, our confidence in the future in order to give our nation and all of us individually a new sense of purpose. The journey to finding a solution for our health and economic crisis can also help us to reignite the spirit of unity in our country.
We are the heirs of generations who survived threats much more powerful and gruesome than those that challenge us now. Our forefathers were strong men and women who shaped a new society during the great depression, who fought world wars, and who carved out a new charter of peace for the world and we will be forever indebted for their sacrifices.
Honourable Speaker, allow me to pay tribute to one of our gallant leaders in the province that left us before their time. At the time of his passing, he was the African National Congress’ (ANG) North West Regional Task Team Convenor in the Dr Kenneth Kaunda Region. Cde Thabo Glen Mosiane, also affectionately known as “Mothonyana” or “General Kwakwa” met his untimely departure in 2018 and that resulted in a huge loss to the ANG as he was one of the selfless unifiers within the organisation. He was born on 02nd June 1971 and would have
celebrated his soth birthday yesterday had he still been with us. We are
truly indebted to him and to his family for his sacrifices and we wish to convey a message to him that we will keep a light burning within us in his honour.
Honourable Speaker, I once more wish to express my sincere gratitude for the continued guidance and support received from Honourable Premier Prof. Job Mokgoro and my colleagues in EXCO. I further wish to thank the Honourable Chairpersons and Members of Public Accounts and Finance, Premier and Cooperative Governance and Human Settlements Committees, the Head of Department together with Team Provincial Treasury and Support staff in my Office together with my family.
I thank you. Ke a leboga.
Source: Government of South Africa