NORTH WEST

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• NORTH WEST
• PROVINCIAL TREASURY
• PRESENTATION ON CONDITIONAL GRANTS
• MEC. DE AFRICA

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INTRODUCTION

• Conditional grants are allocated for three years
  but change annually
• Division of Revenue Act only available on 1 April
• Additional conditional grants gazetted only in
  December

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Transfers Expenditure
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Transfers Expenditure
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ALLOCATION AND SPENDING TRENDS

• Departmental baseline allocations reduced to
  fixed costs
• Benchmark controllable expenditure
• 10 top-slice for development and skills
• Budget allocations will be fixed for three years

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Assessment of monitoring capacity

• Sub directorate established to monitor
  infrastructure including conditional grants
• Early warning system used to report deviations on
  spending on monthly basis
• Departmental CFOs are responsible to analyze
  over/ under expenditure and provide reasons
• The under-spending results from beneficiary
  departments not being able to plan properly and
  tender on time.

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Assessment of monitoring capacity

• Procurement/ Tendering responsibility has been
  assigned to departments.
• All departments are establishing supply Chain
  Management Units whos role is to manage
  procurement
• Monthly financial reports
• Meetings with departments
• Monitoring constraints by PFMA and DoRA

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UNDER-EXPENDITURE ON CONDITIONAL GRANTS (R000)
DEPARTMENT Health Education Housing Local Government Social Development Agriculture Infrastructure TOTAL UNDER 72,885 13,452 141,915 9,031 62,946 0 50,111 350,340
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UNDER-EXPENDITURE CAPACITY
DEPARTMENT Health Education School nutritional programme Local government Housing Infrastructure REASON Lack of planning Dept did not have enough time to appoint officials to manage the grant when function transferred from Health Lack of capacity in municipalities Lack of planning capacity Lack of planning
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NEW INITIATIVES

• Budget Oversight Committee
• Quarterly meetings with departments and entities
• Intervention by Premier
• Cash appropriation is based on ability to spend
  by dept.

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MONTHLY REPORTING

• Previously Monthly reporting by departments
• Current year Monthly and quarterly reporting by
  departments and public entities

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BUSINESS PLANS

• Business plans submitted directly to national
  departments
• National departments submit to National Treasury
• Provincial treasury only monitors submission of
  business plans

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OWN ANALYSIS

• National Treasury delayed the first instalment
  of the Infrastructure Conditional Grant as is it
  was only received during July 2004.
• Forensic Audits, departmental planning and Tender
  processes delayed the start of projects and the
  appointment of consultants as these projects were
  held back for investigation.
• The splitting and merging of some departments
  resulted in major disruptions of payments and
  planning
• New staff members were appointed to assist with
  payment processing in merged departments, which
  resulted in delays.
• Capacity problems and planning of projects are
  experienced at municipalities with regard to
  local government.

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OWN ANALYSIS

• Inability to plan in time
• Lack of capacity in terms of appropriately
  qualified officials
• Inability to retain qualified personnel

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Spending in 1st 4th quarter
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Spending by other Agencies

• Infrastructure grant Health and Education use
  IDT (26)
• Housing grant and human resettlement Transfers
  to municipalities
• HIV/AIDS grant Health transfers 34 to NGOs
• Agriculture Transfers to public entities (DED)

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Challenges and lessons learned in implementing
financial management legislation

• Problem with appointing and retaining staff for
  PFMA implementation
• Inability to plan in advance to implement
  programs
• Lack of capacity in terms of project management
• Excessive use of consultants

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Challenges and lessons learned in implementing
financial management legislation

• Implementation of MFMA also poses similar
  challenges to PFMA
• Local Governments regard assistance as
  interference.
• Difficulty in separating roles
• No uniformity in financial systems

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CONCLUSION

• Receipts are evenly spread
• Only Agriculture received bulk of funds in the
  last quarter
• Spending trends confirm lack of planning and
  tendering

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• THANK YOU