The 2017/18 Budget speech for Finance, Economy and Enterprise Development (Feed) presented by Honourable Wendy Joy Nelson, MEC for Finance, Economy and Enterprise Development at the North West Provincial Legislature
Honourable Speaker of the Provincial Legislature
Honourable Premier of People’s Province of Bokone Bophirima, Rre Supra Obakeng Ramoeletsi Mahumapelo
Honourable Members of the Provincial Legislature Honourable Members of the Executive Council
Executive Mayors, Mayors, Speakers and MMC’s for Finance and Local Economic Development
Chairperson of SALGA North West
Chairperson of the Provincial House of Traditional Leaders, Kgosi Zibi Dikgosi tsa rona tse di tlotlegang tsa Bokone Bophirima
Leaders of Political Parties represented in this august House Chairpersons and Board Members of Parastatals
Director General, Heads of Departments and CEO’s of State Owned Entities
Leaders and Members of Labour Movements, Civil Society and Faith Based Organisations
Leadership of the African National Congress and Comrades
Ladies and gentlemen
Honourable Speaker as we continue to honour the late Oliver Reginald Tambo in what the People’s Movement has termed the Year of Oliver Tambo, the Year of Unity in Action, we implore upon citizens of our Province and South Africa at large to do so by implementing economic development initiatives that supports radical economic transformation. In recognition of the daunting “unending” task of developing a non- racial democratic South Africa, which task is the responsibility of the current and future generations, the Province is calling upon all citizens, business community, private sector and organised labour to work together in the context of Saamtrek- Saamwerk to dismantle the socio-economic features of apartheid; triple challenges of poverty, unemployment and inequality.
The current racist tendencies which have reared its head within the Province such as the unacceptable racist incidents in Coligny requires all of us irrespective of our political affiliation to work tirelessly on building a united, non-racist and non-sexist democratic South Africa in the spirit of Saamtrek-Saamwerk as well as Reconciliation Healing and Renewal (RHR).
Our late Cde President Oliver Tambo encouraged South Africans to “seek to create a united Democratic and non-racial society…..using the power to derive from the discovery of the truth about racism in South Africa, you will help us remake our part of the world into a corner of the globe on which all - of which all of humanity can be proud.” It is for this reason that in the construction of a united, democratic and non- racial society as directed by the icon of our struggle, Cde President OR Tambo, we are mindful of the past injustices and invariably are compelled by the current socio- economic conditions to continue with our efforts of reconciliation and healing processes. The Province, led by Hon SOR Mahumapelo, found it imperative to fulfil the wishes of the struggle icon through the implementation of the Third Concrete, namely; Reconciliation, Healing and Renewal (RHR).
Honourable Speaker, it is evident that the current economic climate of our Country in particular our downgrading to below investment grade which is commonly referred to as “junk status” is a temporary setback. Notwithstanding the downgrade to “junk status” and the projected negative economic outlook, the “junk status” has created opportunities for the country and the Province.
It compels us to build our economic resilience based on our Provincial economic opportunities by deliberately directing investment to villages, township and small dorpies (VTSD) for economic growth and development. While recognising the importance of participating in the global economy, the economic growth in the VTSD should serve to protect us from the global external factors and materially limit our exposure to the world economic uncertainties.
It is reassuring that as early as 2014, when the Fifth Administration took over, led by the visionary leader in the person of Honourable Premier SOR Mahumapelo, unashamedly started a progressive agenda which seeks to radically transform our economy through the implementation of the Five Concretes by specifically growing the Agriculture, Culture and Tourism sectors and directing investment to the most depressed areas of our Province, namely the villages, township and small dorpies (VTSD).
Honourable Speaker, the Government of Bokone Bophirima is unapologetic about its determination to change the socio-economic conditions of the previously marginalised communities; mainly communities located in the VTSD areas and we will not deviate from the Five Concretes as they serve as a basis for implementation of the National Development Plan (NDP). The current economic conditions have re- ignited our desire to double our efforts in the implementation of the Five Concretes and the 2017/18 budget of our Department serves to re-affirm the position of the Province in the implementation of the programmes that seek to alleviate poverty, reduce the unacceptable levels of unemployment and address persistent inequalities that continue to perpetuate in Bokone Bophirima and the Country.
The resolve to deal with the triple challenges requires visionary leadership. As the Province, we are fortunate and grateful to learn and benefit from the insightful guidance of the Honourable Premier, when he said that “visionary leadership is the ability to use lessons of the past to act in the present such that there is broad convergence of thought and action in determining future history”.
Honourable Speaker, in agreeing with the call by the Premier, we continue to learn from the past and use the experiences of the past to implement the “future history” in the context of National Development Plan; Rebranding, Repositioning and Renewal (RRR) anchored on the Five Concretes as an important vehicle of shaping the “future history” and that “future history” is largely about the perpetual re-construction of the democratic non-racial and non-sexist South Africa.
Economic outlook
Honourable Speaker, the National Development Plan has proposed that the South African economy should grow by 5.4% per annum in order to create additional jobs for many unemployed South Africans, reduce unemployment by 6% by 2030 and reduce income inequalities.
As a response to the slow economic growth, the Province has targeted a 6% economic growth by 2019, by driving economic growth through key provincial strategic economic pillars of Agriculture, Culture and Tourism (ACT) supported by tributaries and VTSD industrialisation. Bokone Bophirima Government will continue to provide a conducive environment for the private sector and community participation in the development of our economy in the context of Saamtrek-Saamwerk.
The current economic outlook should not shake us, if anything; it should serve to sharpen our tools for implementation of radical economic transformation programmes. It should drive us to deliver the best possible public services with limited resources and I am convinced that we will overcome this temporary setback of “junk status”. It compels us to be cautious in allocating and redirecting scarce resources towards priorities.
The Premier of Bokone Bophirima, Honourable Mahumapelo has already laid the foundation during the 2017 State of the Province Address when he re-affirmed the Fifth Administration’s commitment towards the implementation of the National Development Plan, pursuant to the attainment of our radical socio-economic transformation agenda. Consistent with the Premier’s call, the 2017/18 departmental budget commits FEED to the continued implementation of the NDP and Five Concretes, which details I shall provide later.
Achievements for 2016/17
Honourable Speaker, the assessment of our performance during the past financial year indicates some of the key achievements but they are not limited to the following:
- Finance has for the past three financial years successfully maintained clean audit status;
- Economy and Enterprise Development has in the 2015/16 financial year obtained clean audit status. Whilst celebrating the positive audits of FEED, we are working tirelessly with all departments to increase the number of “clean audits”. I am convinced that the audit report for 2016/17 will result in the Province increasing the number of “clean audit” reports;
- Finance, Economy and Enterprise Development paid invoices within 30 days for the twelve months effective from April 2016 to March 2017 without fail;
- FEED spent R184.4 million towards VTSD suppliers and this translated to 81% of its identified items;
- Support provided to Departments contributed to the reduction in the number of qualification areas. The improved audit outcome where none of the departments received a disclaimer or adverse opinion has come as a result of the Executive Council taking keen interest and leadership in the implementation of Post Audit Action Plans by tracking progress regarding the implementation of corrective measures on a monthly basis;
- The Provincial Supply Chain Management has conducted 448 Community Outreach Programmes through Setsokotsane. These services included 50 Tendering Workshops, 20 Pricing and Invoicing Workshops, 29 Rural Development Projects, 33 Consultations and 270 VTSD Supplier Registrations;
- Working together with Ikatisong School of Governance, the Department, in collaboration with Department of Higher Education and Training (DHET) and National Skills Fund (NSF), linked 150 unemployed graduates and learners to experiential opportunities in departments, entities and municipalities. By the end of the programme which varies from 1 – 2 years effective from October 2016, the graduates would have gained a minimum of 1 year experience to enter the job market.
Honourable Speaker, I am pleased to announce that we have exceeded the revenue target of R1.1 billion by R55 million which represents 5% of our own revenue budget. We remain encouraged by this positive performance which is the best revenue performance in the last five years and we plan to maintain it.
Plans for 2017/18
Honourable Speaker, to improve the 2016/17 audit outcome, the Department has intensified support towards the implementation of the 2015/16 Post Audit Action Plans (PAAP) of all municipalities in the Province. As stated during the Provincial Budget Speech, the municipalities are compelled to submit their interim financial statements before the end of May 2017 for review. We remain confident that all municipalities will meet the prescribed deadline of August 2017 on the submission of quality Annual Financial Statements.
Government debts
The intervention by the Department on debt owed by Government to municipalities has yielded positive results. During the 2016/17 financial year, government departments paid a total amount of R653 million to municipalities. The Provincial Treasury has further ensured that an amount of R245 million has been ring-fenced by Public Works and Roads in order to continue to service all outstanding debt owed to municipalities in respect of rates and taxes.
Audit improvement Strategy for Departments and Entities
Honourable Speaker, effective from 1 April 2017 all departments successfully migrated to BAS version 5 as per the directive of National Treasury. The Provincial Treasury managed to conclude the whole conversion process with the assistance from the provincial departmental staff.
Honourable Speaker, the overall performance of Provincial Departments with respect to audit outcome for the year ending 31 March 2016 has not changed materially compared to the past three years. Additional one (01) clean audit and three (03) more qualifications were obtained whilst others obtained unqualified audit reports.
Honourable Speaker, having noted the serious capacity challenges in entities, the Provincial Government, through the FEED has developed and is currently implementing an intensified support programme. Eight (08) entities’ Post Audit Action Plans have been loaded on the PAAP On-line System for monitoring and improvement of the quality of information reported. The Provincial Treasury will closely monitor the implementation of the PAAP. On the job training is being provided in the preparation of financial statements and for audit readiness. Regular training and skills development has been offered to the Chief Financial Officer units of the entities to augment the existing capacity in the entities. Mmabana Arts & Culture Foundation, NW Parks Board, NW Tourism Board and NW Housing Corporation Entities are being assisted with physical verification and valuation of assets.
Procurement reforms
For the 2017/18 financial year, the Province is embarking on the following initiatives as part of ongoing Provincial Supply Chain Management Reforms:
- The Department will conduct in excess of 80 Community Outreach Tendering Workshops and facilitate registration of SMME’s and Cooperatives on Central Supplier Database as part of Setsokotsane and Premier’s VTSD Entrepreneurship Forum;
- The Department, through the Premier’s VTSD Entrepreneurship Forum, will conduct Preferential Procurement Regulation Workshop on 16 May in Ditsobotla, Ga-Motlatla Village as part of the provincial roll out plan. The workshops will be extended to all districts and aims to empower VTSD suppliers and communities in rural areas on government procurement processes in an effort to facilitate access to procurement opportunities;
In the endeavour to professionalise Supply Chain Management in the Province, the Provincial Treasury will be registering all Heads of Supply Chain Management with the Professional Chartered Institute of Procurement and Supply (CIPS-Africa). This will go a long way in ensuring that Heads of SCM carry their function with high level of professional ethics and integrity;
The reviewed Preferential Procurement Regulation 2017 has been effected from 1st April 2017. In terms of this regulation, procurement authorities are empowered to set clear criteria which favours businesses owned by black people, women, youth, military veterans and people living with disabilities. This will also provide procurement opportunities to rural, under-developed township enterprises and cooperatives in line with the VTSD concrete;
Honourable Speaker, the Provincial Treasury will be finalising transversal contracts during the financial year 2017/18 and the beneficiaries of such contracts would be entities within VTSD areas in the Province. This process is aimed at reducing the cost of arranging individual tenders and increasing government buying power.
Provincial Budget monitoring
Honourable Speaker, cost saving measures have been identified as a means of improving budget efficiency in departments. Efforts were also taken to unlock funds from departments that failed to meet the 50% expenditure as at September 2016/17 inclusive of poor spending on non-core items. Funds realised through this exercise was used to address priority challenges in the Province. The capacity to spend improved significantly in departments from 97.65% (audited) in 2015 as compared to 98.09% (preliminary) by the end of March 2017. The Department will continue to assist and monitor spending by departments including Public Entities.
Infrastructure Coordination
Honourable Speaker, the focus for the 2017 MTEF in relation to infrastructure is to ensure the sustainability of the Infrastructure Delivery Management System (IDMS) across all Provincial Departments and Municipalities.
Bokone Bophirima has been identified by the National Treasury as a pilot Province for the implementation of the Infrastructure Progression Model (IPM) which is a tool to measure the effectiveness and capability of the Province to implement and sustain the IDMS.
After thorough assessment of the infrastructure spending and good and services, we have noted the slow spending on VTSD in relation to infrastructure, which is lower than the spending on goods and services. This anomaly must be addressed aggressively by all Departments and Entities and will be monitored in the same way as the goods and services budget. All Project Management Units (PMU’s) in the Province including entities will be subjected to the same stringent monitoring measures. In addition, spending trends of all PMU’s will constitute part of the expenditure report which will be submitted to the Executive Council effective from May 2017. This is consistent with the State of the Province Address (SOPA) directive which requires that Departments be monitored on a monthly basis to ensure that all contracting opportunities benefit contractors with CIDB Grading 1 to 4 located in VTSDs, and limit infrastructure procurement opportunities to contractors outside of the Province. Full speech [PDF]
