Programme Director,
Auditor-General Mr Terence Nombembe,
Members of the Executive Council,
Heads of Department,
Mayors and Municipal Managers,
Ladies and Gentlemen,
Good Day.
First and foremost I want to welcome the Auditor-General Mr Terence Nombembe. It is almost three years since government launched Operation Clean Audit 2014. During the launch we said all municipalities and provincial departments must achieve unqualified audit opinions by 2014.
Our commitment was informed by the fact that the world is demanding greater transparency both in government and the private sector.
Importantly, a clean bill of health not only attracts investors, but it also improves the public image of government. Some investors go as far as stating that financial information without an auditor’s report is “essentially worthless” for investing purposes.
In my first address in 2009, I said that this government would be moving forward prudently in building a sustainable future. At the time, the global economy had just plunged into a serious recession. A cautious approach seemed best.
Prudence has been the central idea over the past three years and it remains relevant even today.
With the passage of time, Programme Director, we can see that this cautious approach of prudent financial management can build a solid foundation for our future.
In this sensible approach, we live within our means, continuously improve our financial management, use debt appropriately, and plan for the future that we desire and deserve.
Our sensible approach is paying dividends. Five municipalities in KwaZulu-Natal have achieved clean audits. In addition, as you all know, the provincial government ended the last financial year with substantial savings as a result of our fiscus austerity measures.
We were able to fully repay our overdraft, clear unauthorized expenditure and received interest on positive cash balances. At the end of December 2011, KwaZulu-Natal (KZN) had R3.6 billion cash in the bank account.
We believe that our improved financial management will better enable this province to grow and prosper. In managing public money properly, we have demonstrated that we are ready to take charge of our future. As we receive these awards of achievements today, I want to assure the auditor general of our continuing co-operation with his office.
Importantly, all members of the executive council, Heads of departments, Mayors and municipalities will continue to provide leadership to ensure adherence to best financial management practices on a daily basis. We will continue to fight and prevent corruption in the Supply Chain Management unit, an area which is too vulnerable to corrupt practices such as bribery and fraud.
Cabinet directed Treasury to undertake KZN Supply Chain Management policy compliance in all government departments. This was aimed at identifying compliance levels on supply management processes by departments when procuring goods and services.
The compliance supply chain management assessment report is presented regularly to Cabinet and it provides a clear overview of the following:
- Functioning of Supply Chain Management units
- Functioning of Bid Committees
- Number of bids/quotations issued and which were issued under emergency delegation and why?
- The number of bids appealed against and the outcomes of the appeals.
- Funds have been provided to the Supply Chain Management Unit to develop, together with the Office of the Premier, a system that will eliminate fraud in our supply chain management.
We are making satisfactory progress in promoting a culture of effective risk management by establishing risk management forums and in promoting continuous awareness through focused strategic and operational risk assessments.
We are putting in place measures to eradicate practices of suppliers who offer kickback to procurement managers in order to secure contract or secure inside information. We announced recently that Treasury is reviewing Supply Chain Management practices, and agreed to lower the threshold for quotations from R1 million to R500 000. This encourages competitive bidding and reduces collusion between officials and service providers.
It was reported in the media few months ago that the country could lose as much as 20% of its total procurement budget to graft annually. This could be translated to between R25bn and R30bn.
The Special Investigating Unit (SIU) is investigating 558 procurement contracts to the value of R1.9bn and 360 cases of conflict of interest where R3.4bn was involved.
In Africa, it is estimated that the cost of corruption could represent up to 25% of the continent’s Gross Domestic Product (GDP) and increase the cost of goods and services by as much as 20%.
Honoured guests, it is upon me and you to stand up and be counted. The image of a corrupt South Africa and African continent in particular will result in the loss of much needed domestic, regional and foreign direct investments. The various forms of takings (bribes, kickbacks, etc.) and transactions costs due to corruption (delays, distortions, etc.) increases uncertainty over the returns to capital and raise the cost of production, which ultimately reduces profitability.
Also, corruption acts as a tax on capital; but unlike official tax, it is uncertain and unpredictable, and therefore difficult to internalize. Corruption perpetuates an unequal distribution of income, asset ownership and it further causes unequal access to basic economic opportunities and basic services such as education and health.
Clearly, the poor are most vulnerable to corruption both in terms of not being educated enough to demand what rightfully belong to them and for being easy targets for intimidation, extortion and bribery. Transparency International’s Global Corruption Barometer, for instance, indicates that corruption affects respondents with lower incomes more than other income groups.
While they can least afford it, poor respondents consistently report paying more bribes than other income groups to access public services. The amount of bribes paid by low income households is also likely to represent a higher share of their total income.
As leaders we must protect the most vulnerable members of our society who are affected by this scourge. We have to constantly remind ourselves of our commitments to the electorate.
Following the successful hosting of the Provincial Integrity Leadership Conference last year, we continue to promote integrity within government departments. We say “I do right - even when nobody is watching”.
We are focusing on individual consciences as opposed to relying on legislative and regulatory prescripts in our fight against corruption and maladministration.
Ladies and Gentlemen when we met in Durban with South African Local Government Association (SALGA) soon after the local government elections last year, we made a commitment to put all our resources to better the lives of our people.
Today I want us to affirm our commitment to keeping our promises. What we need to reaffirm is our resolve as elective representatives of our citizens to live up to the mandate given to us. We are here to uphold the principles of the Constitution of the Republic. We should always be mindful that once the fact of our mandate escapes our minds, we will be betraying the very source of our struggle for a free and democratic South Africa.
We have to bear in mind our mandate to be a government that is centred in delivering a better life for all. The betrayal of that mandate is manifested through our elected officials and cadres in self-enrichment at the expense of the citizenry. That is why we have state organs such as the office of the Auditor General, to safeguard against the abuse of state resources for the benefit of a few officials and their cronies.
My intention today is to urge all of us here to recommit ourselves to uphold the principles of clean government. I wish to emphasize that our primary duty as elected and appointed members of government is loyalty to our Constitutional duties.
I wish to emphasise that once we lose focus on our Constitutional duties, we have then betrayed the broader wishes and confidence of our constituents, the people who have given us the mandate to govern this country and lead it to a more prosperous future for all.
With regards to the Agenda of for the PCF, we have structured it to ensure that we are able to strengthen institutional coordination and collaboration in order to ensure that all the programmes outlined in the State of the Province Address (SoPA) are implemented in a coordinated manner.
I pointed out that this province will be embarking on an infrastructure revolution over the next decade. As the provincial government we are committed to speeding up infrastructure development because we believe that it is a catalyst for economic growth not only in this province but in the whole country.
It is however very important to note that the infrastructure revolution will never succeed without an adequate provision of water and electricity. KwaZulu-Natal, being one of the economic and industrialized hubs of South Africa needs to look at solutions to solve its own energy and water challenges. As government we have consulted extensively with stakeholders in the public and private sectors over the past three years.
We have absolute clarity on the water and energy consumption requirements for both the households and industries from now into the next 10 years. While conventional (thermal, hydro and nuclear) energy generation plant would take many years to install, an immediate solution to the energy crises would be to reduce the wastage of energy/electricity and to encourage the use of renewable energy sources.
With those few words, I wish you everything of the best.
I thank you!
