MEC Mlungisi Mvoko: Eastern Cape Provincial Budget Speech 2025

Mr. Mlungisi Mvoko MEC of Finance Budget Policy Speech 2025/26 Financial Year

Honourable Speaker Deputy Speaker Honourable Premier
Members of the Executive Council
Honourable Members of the Provincial Legislature Director-General
Heads of Departments
Chief Executive Officers of our Public Entities Traditional and Religious leaders Distinguished Guests
Fellow Citizens of the Eastern Cape

Good day.

Honourable Speaker, as the dawn breaks over the vast horizons of our province, we are reminded that a new day always brings renewed hope and boundless possibilities. The Eastern Cape, much like the rising sun, stands on the cusp of transformation despite the turbulence that surrounds us. The road ahead is not without its challenges, but as the sun persists beyond the night, so too shall we rise above economic uncertainty, global instability, and local fiscal pressures.

Today, I stand before you to present a vision that embraces resilience, innovation, and strategic leadership to ensure a more prosperous and financially stable future for our people.

I stand before this august House to table the 2025/30 Strategic Plan (SP), 2025/26 Annual Performance Plan (APP) and the 2025/26 Annual Operational Plan (AOP) of the Eastern Cape Provincial Treasury. These instruments will shape the economic and financial trajectory of our province during the seventh term of administration.

Honourable Members, the economic landscape remains fragile, shaped by persistent geopolitical and regional tensions that continue to impact our national and provincial economy. The Russia-Ukraine war, the ongoing Israel-Hamas conflict, and the shifting policies of global superpowers, including the United States, have influenced trade, supply chains, and financial markets, creating challenges for our fiscus. This is further exacerbated by the withdrawal of the USAID funding. Also, our country is not immune from the detrimental consequences of the regional conflicts in Eastern DRC and in Mozambique. These challenges continue to have a negative impact on our economy that is deeply affected by poverty, unemployment, and inequality.

Despite these obstacles we remain resolute in strengthening our economy through multilateralism, partnerships and collaborations with other global, continental and regional participants. South Africa’s current chairpersonship of the G20 provides an invaluable opportunity to reposition our economy and strengthen global cooperation. Through this leadership role, Africa has gained a greater voice in global economic forums, allowing us to advocate for sustainable investment, fairer trade policies, and infrastructure development that directly benefits Africa, South Africa and the Eastern Cape Province.

Madam Speaker, before we chart our course forward, it is crucial to reflect on the significant milestones achieved over the sixth term of Administration. Despite economic constraints, the Provincial Treasury has successfully strengthened fiscal sustainability, improved financial governance, enhanced infrastructure delivery, and supported municipalities to ensure sound financial and resource management.

Our strict cost-containment measures and revenue enhancement strategies have led to a consistent overachievement in provincial revenue collection, with the province exceeding its annual targets since 2020. These efforts have maintained liquidity in the Provincial Revenue Fund (PRF), ensuring a stable financial footing for government operations. Through proactive budget monitoring and the enforcement of expenditure ceilings, we have continued to protect key service delivery priorities, while reducing non-essential spending. The wage bill containment strategy has successfully optimised personnel costs by centralising PERSAL authorisation for high-risk departments, leading to an improvement in the CoE ratio.

Municipal financial governance has remained a priority, with targeted interventions in distressed municipalities such as Amathole, Makana, OR Tambo, and Enoch Mgijima. The Financial Recovery Plans and audit improvement strategies have contributed to steady progress in municipal governance, with an increasing number of municipalities achieving unqualified audit outcomes.

In terms of infrastructure investment, the Infrastructure Strategy has been instrumental in driving integrated planning and delivery across departments and municipalities. The implementation of the Infrastructure Delivery Management System (IDMS) has improved transparency and efficiency in project execution, ensuring greater accountability in infrastructure spending. Technology and data intelligence have also played a pivotal role in modernising financial governance.

The rollout of the Business Intelligence system across departments has enhanced real-time expenditure tracking, improved budget oversight and reduced inefficiencies. These achievements reflect our unwavering commitment to building a capable, ethical, and developmental state. Furthermore, the ECPT will continue to play its oversight role on the 9 priority intergration areas. These intergration areas focus on governance, service delivery, infrastructure, financial management, systemic challenges and supporting local government, health and education turnaround strategies as well as youth development and provincial strategic projects.

Madam Speaker, in the 2025/30 Strategic Plan, and the 2025/26 Annual Performance Plan (APP), we reaffirm our dedication to sound financial governance, enhanced service delivery, and long-term economic resilience to realise our vision of a prosperous province supported by sound financial governance and resource management.

Honourable Members, the Government of National Unity (GNU) has set forth three overarching priorities for the seventh term (2025/2030):

1. Economic Growth and Job Creation
2. Reducing Poverty and Tackling the High Cost of Living
3. Building a Capable, Ethical, and Developmental State

The Provincial Treasury is aligned with Priority 3: Building a Capable, Ethical, and Developmental State under the Governance, State Capacity, and Institutional Development (GSCID) Cluster. The 2025/30 Strategic Plan reflects this priority by focusing on following four pillars:

Fiscal Consolidation: Strengthening Financial Sustainability

Honourable Speaker, over the past five years, we have ensured that expenditure compliance remained at an average of 98%, demonstrating that our fiscal prudence and disciplined financial management are yielding positive results. We have maintained a positive balance in the Provincial Revenue Fund, preventing departmental overdrafts and ensuring liquidity stability. Since 2020, we have consistently exceeded provincial own revenue targets, with the most notable being an over-collection of R160 million in the 2023/24 financial year and R140 million in the 2024/25 financial year. However, the province must reach its full potential in this area in line with the revenue study recommendations.

Provincial Treasury continues to support departments with revenue collection mandate and has played a pivotal role with the establishment of an inter-governmental workgroups with a focused approach to assess the needs and strengthen revenue collection at the major revenue departments. This support includes developing revenue implementation plan in a programme and project management approach with the revision of revenue plans in the short term, over the medium term and in the long-term. Through the support the revenue enhancing strategy is receiving from the Provincial Project Support Unit (PPSU) at the Office of the Premier (OTP), we remain hopeful that we shall achieve our potential.

Moving forward, we will continue to enforce zero-based budgeting to enhance efficiency and eliminate wastage. Our efforts to increase provincial own revenue will continue with a targeted 5% annual increase through the identification of new revenue streams and optimisation strategies. Furthermore, in 2025/26, we will implement automated expenditure tracking systems to ensure a real-time budget monitoring and enforce fiscal discipline across departments. Special focus will be placed on the Department of Health, which continues to battle with financial instability. A task team has been deployed in this regard. Its role is to monitor expenditure and efficiency.

Supply Chain Management Reforms: Enhancing Procurement Efficiency

Honourable Speaker, our procurement transformation agenda has also gained momentum. The Local Economic Development Procurement Framework (LEDPF) has ensured that over 59.55% of procurement spending has benefited Eastern Cape-based businesses in the current financial year. We have also strengthened supplier database registration, with over 55,000 Micro, Small, and Medium Enterprises now registered, enhancing their access to government contracts.

The enforcement of the 30-day payment rule has yielded positive results with 12 departments complying with payment of service providers within stipulated timeframes. We believe that our intervention for fiscal and liquidity stability at the Department of Health will lead to having all department being able to pay suppliers within 30 days.

To promote transparency and efficiency in public procurement, we will refine the invoice tracking system. We are committed to ensuring full compliance with the 30-day payment rule, prioritising timely payments to service providers, particularly MSMEs. Measures will be strengthened to address any bottlenecks that may cause delays. Public procurement will also pay a special emphasis on youth, persons with disabilities and women-owned businesses.

In pursuit of strengthening Supply Chain Management (SCM) capacity across the province, the Provincial Treasury facilitated SCM and Bid Committee training for officials from Provincial Departments and Public Entities. This initiative, aimed at advancing the professionalisation of SCM, provided practitioners with South African Qualifications Authority (SAQA)-accredited courses to enhance their skills and competencies.

During the 2024/25 financial year, a budget allocation of R1.4 million enabled the training of 254 officials. Of these, 65 officials were capacitated on Bid Compilation, Evaluation and Adjudication, while 189 officials received training in key areas such as Demand Management, Contract Management, Asset Management, and Strategic Sourcing.

Given the high demand for SCM training, the Provincial Treasury will expand this programme over the Medium-Term Expenditure Framework (MTEF) period. A total budget of R4 million has been earmarked for this purpose, with R1.286 million allocated for the 2025/26 financial year, R1.346 million for 2026/27, and R1.407 million for 2027/28. This sustained investment reaffirms our commitment to building a professional and efficient SCM workforce that upholds the principles of transparency, accountability, and good governance in public procurement.

Provincial Treasury will continue to support the Department of Health and the Department of Education in streamlining their SCM processes to achieve value for money through the implementation of strategic sourcing techniques.

Madam Speaker, the National Development Plan has underscored the imperative for a differentiated approach to procurement, aimed at enhancing the performance and efficiency of the state procurement system. In alignment with this directive, the Provincial Treasury, in collaboration with National Treasury, has successfully rolled out Strategic Procurement awareness sessions across all Eastern Cape government departments in the previous year. It is now incumbent upon all departments to implement the Strategic Sourcing tool as means to drive procurement differentiation. This initiative requires the identification of key leverage points within procurement categories where government holds significant buying or influencing power to reshape industries, formulate effective sourcing strategies, achieve cost reductions, and ultimately enhance the value and benefits derived from goods and services procured by the state.

These include the food security agriculture framework which was developed but will have to be implemented by the Department of Agriculture. Provincial Treasury will support and monitor the implementation.

Infrastructure Support: Driving Economic Growth

Honourable Speaker, despite economic constraints, the province has invested billions of rands towards critical infrastructure development.

As such, seventeen municipalities have improved their social infrastructure spending, which has enhanced access to basic services. We have resurfaced 900 km of provincial roads, directly addressed backlogs and improved mobility in the province.

The review of the implementation of the planned public Infrastructure spending in the Eastern Cape over the past 5 years has revealed that the infrastructure expenditure trends reflected improvements reaching more than 90 per cent spent of the allocations.

However, the Province is still immersed in the challenge of ensuring that the performance on the ground correlates to value created as there are critical issues that still needs attention in the Infrastructure Value Chain.

The next phase is to ensure that all planned infrastructure projects are timely completed, and quality matches the budget. We will strengthen intergovernmental collaboration to streamline infrastructure delivery and expand municipal technical assistance programmes to improve project implementation.

For the purpose of monitoring project performance in line with the allocated funds, the Infrastructure Reporting Model (IRM) web-based system will continue to be strengthened and utilized as an enabler for infrastructure delivery. Currently, Provincial Treasury undertakes a technical analysis of the infrastructure model monthly, and this analysis is shared with departments and the provincial infrastructure governance structures so that bottlenecks in planning and delivery can be timeously dealt with. The use of the IRM will further assist with integration as it will be utilized to assist with the monitoring of funds planned and utilized in the province by the various spheres of government.

In the 2024/25 financial year, significant progress was made in supporting municipalities to spend their conditional infrastructure grants, ensuring the provision of basic services and addressing critical backlogs in key areas such as electricity, roads, water, and sanitation. Targeted funding was allocated to municipalities affected by disasters, facilitating their recovery and rebuilding efforts. The two metropolitan municipalities also received substantial support to enhance infrastructure development.

Provincial and Municipal Governance and Accountability

Honourable Speaker, the Provincial and Municipal Governance and Accountability remains a central pillar to our mandate. Our interventions have placed the Eastern Cape in first place nationally in MFMA compliance. This reflects our commitment to improving municipal financial governance. Over the past five years, 14 provincial departments and 36 municipalities have shown improved financial management performance through our audit improvement strategies. We have developed and implemented Financial Recovery Plans for distressed municipalities, bringing financial stability and accountability.

Within the next five years, and through our oversight role, we will assist departments, public entities, and municipalities to improve audit outcomes. We will continue to provide technical support to municipalities on Annual Financial Statements preparation, reducing reliance on external consultants. This will result in 30% reduction of adverse audit findings and improved service delivery.

Enhanced interventions will be directed at departments that continue to struggle to attain unqualified audit results, particularly the Department of Health and the Department of Education.

The implementation and monitoring of the Risk-Adjusted Strategy (RAS) for conditional grants, in collaboration with Eastern Cape CoGTA, have significantly improved the utilisation of municipal allocations. In the 2023/24 financial year, municipalities successfully spent 91% of their aggregated grants, the aim to achieve full utilisation by strengthening RAS initiatives. Division of Revenue Act (DoRA) workshops in all districts will take place in this regard. These workshops will equip political and administrative leaders on their oversight role on infrastructure programmes, rollover process for unspent funds, and to ensure compliance with grant frameworks.

This will mitigate the risk of returning funds to the National Revenue Fund. Furthermore, quarterly technical site visits by a multi-sectoral task team, including Provincial Treasury, CoGTA, Municipal Infrastructure Support Agency, Department of Water and Sanitation, and Department of Mineral Resources and Energy, will be conducted to assess project implementation and ensure value for money.

As part of our ongoing efforts to modernise financial management, we have made significant strides in leveraging technology and data intelligence. The successful implementation of Business Intelligence systems across all 13 departments has strengthened financial monitoring and improved real-time expenditure tracking. Our cybersecurity protocols have been reinforced, to ensure that our financial data remains secure and resilient against cyber threats. Over the next five years, we will integrate Artificial Intelligence (AI) tools to enhance predictive analytics, revenue forecasting, and expenditure tracking. Additionally, real-time financial reporting systems will be enhanced to improve transparency and efficiency across all government departments.

Honourable Speaker, the time for soft landings for officials and suppliers accused of unlawful conduct involving public funds is coming to a close. The net is tightening for those officials who have done business with the State and suppliers found guilty in a court of law for crimes against the financial resources of the State. The Provincial Treasury, in conjunction with the Public Service Commission and Office of the Premier, are actively engaged in adding all supplier found guilty of these crimes to the list of Restricted Suppliers at National Treasury and opening criminal cases against officials who have done business with the State.

In conclusion, Honourable Speaker, the road ahead may have its uncertainties, but our resolve remains steadfast. The opportunities presented by South Africa’s leadership of the G20, the patriotism and resilience of our people, accompanied by the strategic reforms will propel us towards a financially sustainable, economically resilient, and socially inclusive Eastern Cape.

Within the encouraging progress lies the reality that our citizens are still yearning for improved service delivery. We therefore have no illusion on the work ahead of us and we are banking on the leadership at all levels of our government for stewardship in the management of public resources, instilling a sense of discipline and accountability where there is persistent departure from the expected norms. In our engagement with the Audit General the issue of consequence management has been highlighted as inhibiting the progress that we can make as a province and both of us, myself and the Hon Premier (for the executive arm of government) had to commit to attending to this and I believe the Speaker had to make the same commitment for the legislature.

The following are the budget allocations that will drive our programmes in the 2025/26 financial year.

Budget and progamme allocations

I would like to express my sincere gratitude to all the members of the Executive Council of the Eastern Cape, led by Honourable Premier Oscar Mabuyane, for their guidance and support. I also extend my thanks to all the oversight structures that have played a crucial role in helping us fulfill our mandate to the highest standards. Lastly, I would like to thank the Head of Department, Mr. Daluhlanga Majeke, and the Treasury team for their exceptional work in ensuring our department carries out its responsibilities with dedication. The hopes and aspirations of our people rest on your shoulders.

I hereby table the 2025/30 Strategic Plan (SP), 2025/26 Annual Performance Plan (APP) and the 2025/26 Annual Operational Plan (AOP) for adoption.

I thank you!,

Ndiyabulela!, Kea leboga!, Baie dankie!!!