LIMPOPO PROVINCIAL GOVERNMENT REVENUE AND EXPENDITURE REPORT FOR

LIMPOPO PROVINCIAL GOVERNMENT REVENUE AND EXPENDITURE REPORT FOR THIRD AND FOURTH QUARTER 2015/16 FINANCIAL YEAR Select Committee on Finance 18 May 2016

Table of contents • • Introduction Provincial growth Own Revenue collection performance Provincial spending performance Infrastructure spending Provincial bank balances Debt / overdraft Accruals, Unauthorized, irregular and wasteful expenditure • Conclusion 2

3 Introduction • The provincial economy is largely driven by primary and tertiary sector of the economy with minimal high value economic activities. • Provincial growth is resilient but under pressure due to external shocks such as weak global economic growth, low commodity demand, drought conditions and weak investor confidence. • According to credit rating agencies the assignment of a stable outlook reflects policymakers' commitment in managing government debt over the medium term and the broad political support for a macroeconomic strategy, including the National Development Plan (NDP). • Given the low business expansions and new business ventures, government is under pressure to stimulate economic growth through the fiscal policy.

Provincial Economic Growth Limpopo GVA Annual Average growth % • The Limpopo’s economy managed to maintain positive growth over the years with few exceptions. The local economy contracted significantly between 2006 and 2009, the down-turn was largely influenced by global economic developments. • The provincial economy suffered negative growth from 4. 4 percent in 2006 to a low of 1. 2 percent in 2009. Though the economy recovered from 2010, the growth was lacklustre as economic growth in 2014 was only 0. 9 percent. Growth will remain sluggish into 2016 to 2017 due to the El Nino climate phenomenon and low aggregate demand for minerals globally. 4

Limpopo GVA Average annual growth (Constant 2010 Prices) Source: Regional Explorer 2015

Provincial Economic Growth cont. Limpopo GVA sector contribution % Limpopo’s economy is largely driven by Mining Sector, Community services and Trade sector which contribute 27, 24 and 16 percent respectively in 2014. The mining sector’s contribution to the local economy has been increasing over the years, as it increased from 15 percent in 1996 to 28 percent in 2014. The least contributing sectors are Agriculture, Manufacturing and Construction sectors which contribute 2. 6, 2. 6 and 3. 5 percent respectively to the provincial GVA. 6

Provincial Economic Growth cont. • The Province has to reform the provincial economy by shifting from a raw material extracting economy to an industrialised economy which has huge multiplier effects. The development of economic growth centres in the province will increase conglomeration of economies. • SMMEs and Small Emerging Farmers (SEFs) needs both financial and non-financial assistance to remain profitable and preserve job cuts among the low skilled and income working group. • Both provincial administration and local authorities need to assist the national government by maintaining prudent fiscal management, this will reduce pressure on national government by committing less on net government debt. • Socio-political stability and growing national debt to GDP will risk the country by decreasing its credit worthiness. Provincial fiscal policy can be used to support economic growth, job creation and improve the living standards of the citizens by prudent expenditure plans. • The province requires economic growth to be at least at 3 percent to create the much needed jobs and reducing the economic and income divide in the society. The LDP provides the policy fundamentals in taking the province’ economy on a rising growth and development trajectory. 7

Limpopo total population and population growth rate Source: Stats. Sa Population Estimates 2015

Limpopo Gini Coefficient Source: Regional Explorer 2015 The Gini coefficient is a measure of in equality. A Gini score of 0 implies perfect equality (every individual receives the same income). A Gini score of 1 implies perfect inequality.

Limpopo Human Development Index (HDI) The Human Development Index measures a country’s average achievements in three basic aspects of human development; 1. Longevity, 2. Knowledge and 3. Decent standard of living Source: Regional Explorer 2015 HDI is measured between 0 and 1. Countries with and HDI score of - over 0. 8 are considered to have high development, - between 0. 5 and 0. 8 to have medium human development, and - below 0. 5 to have low human development.

Limpopo People living below the lower poverty line (Stats. SA defined) Source: Regional Explorer 2015

Limpopo Unemployment rate, official definition (%) Source: Regional Explorer 2015

Share of Limpopo households receiving basic services at Provincial and National level - 2014

14 Provincial Own Revenue Performance

Own Revenue Collection per Vote 15

Own Revenue Collection per Vote • The original Appropriation for Provincial Own Revenue was R 976. 7 million which was adjusted to R 1. 2 billion. • As at 31 March 2016 an amount of R 1. 3 billion or 104. 7 percent was collected compared to set target of R 1. 2 billion. • The overall over-collection of R 56. 4 million was primarily contributed by Provincial Treasury, Education and Co. GHSTA through interest earned on favourable bank balances and recovery of previous financial years expenditure (Debts). • Economic Development, Health and Public Works are main contributors of provincial own revenue and have under collected their set targets due to late transfer of own revenue from Public Entities; Under collection on Patient Fees(Cash Flow Management challenges by Road Accident Fund); and Poor collection of property rentals. 16

Own Revenue Collection per Economic Classification 17

Own Revenue Collection per Economic Classification • Tax Receipts; Fines Penalties and forfeits; Interest, dividend & rent on land Financial transaction in asset and liabilities over collected with the amount of R 9. 7 million, R 6. 3 million, R 78. 3 million and R 11. 4 million respectively. • Over collection was due to improved collection on gaming levies by Economic Development; Increased collection on vehicle impound fees and fines for contravention of National Environmental Management Act; Positive interest earned on favourable Provincial bank balances; and improved recovery of previous year debts and accumulated surpluses. • Sales of goods and services and Sales of capital assets under collected by R 61. 1 million and R 3. 9 million respectively. • Under performance is due to less collection on property rentals, patient fees, disposal of assets and less collection from public entities. • Collection of R 15. 7 million on Transfers received is as a result of recovery of previous years transfers from Polokwane Housing Association for housing project. 18

Challenges Hampering Optimum Revenue Collection Challenges Root Cause Mitigating measures • Delays in accounting of revenue collected. • Slowness of Basic Accounting System – IT network problems • Provincial GITO and Treasury jointly working to improve IT network systems • Poor collection of property rentals, patient fees as well as recovery of Motor Vehicle Fees collected by Municipalities. • Lack / ineffective Revenue Information Management Systems. • Support departments through ringfencing funds for procurement and improvement of revenue automation systems. • Unrealistic revenue projections • Departments and Entities focus more on spending compared to revenue generation. • Provision of continuous support and monitoring on the determination of credible revenue projections. • Introduced discussions in various provincial Forums to sensitize depts. & entities on the importance of revenue management and enhancement. 19

20 Provincial Expenditure Performance

Overall Provincial Performance 21

Overall Provincial Performance • Compensation of Employees (Co. E) spent R 37. 8 billion or 99. 8 percent representing R 85. 5 million or 0. 2 percent under-spending mainly due to delays in appointments of funded vacant posts and resignations. • Goods and Services spent R 7. 1 billion or 98. 3 percent with underspending of R 125. 1 million or 1. 7 percent of the adjusted budget. • Transfers and subsidies recorded an expenditure of R 6. 0 billion or 91. 2 percent with the underspending of R 580. 7 million or 8. 8 percent mainly due to delay in implementation of housing projects. • Payment for Capital Assets spent R 2. 0 billion or 92. 8 percent representing an underspending of R 155. 4 million or 7. 2 percent. • In overall, the Province underspent the 2015/16 budget by R 921. 8 million or 1. 7 percent. 22

Education 23

Education cont. The department of Education underspent its budget by R 138. 2 million or 0. 5 percent. Ø Co. E overspent by R 21. 1 million or 0. 1 percent due to filling of administrative clerk and support staff posts at public schools and public special schools as well as temporary educators who have moved back into the system. Ø Goods and Services underspent by R 83. 3 million or 4. 2 percent due to delayed procurement of outdoor equipment for ECD Centers and reduced motor vehicles running costs due to write offs. Ø Transfers and Subsidies underspent by R 90. 0 million or 6. 0 percent due amongst others leave gratuities and transfers to Education Development Trust and schools (non reporting compliance). Ø CAPEX spent R 1. 0 billion or 99. 0 percent of R 1. 1 billion budget. The underspending of R 10. 5 million or 1. 0 percent was on machinery and equipment due to delays in finalisation of bidding process for school furniture. 24

Education cont. • The main programme, Public Ordinary School Education spend 100 percent of its allocated budget of R 21. 5 billion. • The programme is responsible for all public ordinary schools which comprise 3910 schools within the province. • The allocated budget includes funds for payments of compensation of employees, expenditure on Learner Teacher Support Material (LTSM), scholar transport, school furniture and teacher development costs. • The allocated budget includes conditional grants such as National School Nutrition Programme (NSNP) and Maths, Science and Technology grants. • Transfers are also made to public ordinary schools for norms and standards to catered for school running costs. • Included in the budget are capital expenditure costs related to repairs and maintenance of buildings and general equipment. 25

Education cont. 26

Health 27

Health cont. • Overall the department spent R 15. 4 billion or 99. 6 percent of the adjusted budget of R 15. 5 billion. The department underspent its budget by R 68. 4 million or 0. 4 percent as follows: Ø Co. E - R 16. 5 million or 0. 1 percent due to delay in the implementation of housing allowance. Ø Goods and services - by R 36. 6 million or 1. 2 percent mainly on HIV/AIDS and Tertiary Services conditional grants – (roll-over applications have been made). Ø CAPEX - R 15. 0 million or 3. 2 percent due to late delivery of mobile clinics. 28

Health cont. • The main programmes in the Department are District Health Services, Provincial and Central Hospital services which accounts for 85. 7 percent of the departmental budget. – District Heath Services includes 449 clinics, 28 health centers, 234 mobile clinics and 30 District hospitals – Provincial Hospital services includes 3 Psychiatric hospitals and 5 regional hospitals. – Central Hospital services comprise of 2 hospitals (Polokwane and Mankweng). • Services provided in these programmes includes provision for compensation of employees, medicine and medical suppliers, laboratory costs, security services, fuel, oil and gas, food supplies, medical waste and consumable supplies. • Included in the budget are capital expenditure costs related to repairs and maintenance of medical equipment, buildings and general equipment. • The allocated budget includes conditional grants such as Comprehensive HIV/AIDS grant, National Health Insurance (NHI) grant and National Tertiary Services grant. 29

Health cont. 30

Social Development 31

Social Development cont. • Overall the department spend R 1. 5 billion or 98. 3 percent of the R 1. 6 billion budget which resulted in underspending of R 26. 6 million. • The underspending is mainly on Transfers and CAPEX due to: – Transfers = R 7. 6 million or 1. 5 percent not transferred to NPOs as a result of non compliance to timely payment requirements by NPOs. – Capex = Delay in delivery of office equipment and motor vehicles amounting to R 19. 7 million. 32

Public Works 33

Public Works cont. • Overall the department spent R 2. 68 billion or 97. 4 percent of the R 2. 7 billion budget. The department underspent by R 71. 6 million or 2. 6 percent. Ø Co. E underspent by R 36. 2 million or 3. 8 percent as a result of prolonged process of filling the vacant posts and employees exiting the system through death, transfers and retirements. Ø Goods and services overspent by R 2. 4 million or 0. 5 percent due the payment of contractual obligations. Ø Transfers and subsidies overspent by R 19. 4 million or 2. 2 percent as a result of additional payment requirements for leave gratuities and municipal rates and taxes for government buildings. Ø CAPEX underspent by R 57. 5 million or 15. 6 percent due to delays in refurbishing the Capricorn Offices, late appointment of contractors for Lebowakgomo, Mopani and Giyani Government complexes and late delivery of ordered water tankers. 34

Agriculture 35

Agriculture cont. • The department spent R 1. 6 billion or 98. 3 percent of its R 1. 7 billion budget with underspending amounting to R 27. 9 million or 1. 7 percent. • The department underspent: Ø Co. E - R 15. 9 million or 1. 6 percent due to late approval of advertised posts (105 posts) as well as late conclusion of security clearance checks. Ø Transfers and subsidies - R 2. 2 million or 1. 3 percent due to reprioritisation of funds under CASP for drought relief. Ø CAPEX - R 25. 0 million or 34. 3 percent due to delayed implementation of RESIS projects as a result of pending community disputes. • The department overspent: Ø Goods and Services - R 15. 6 million or 4. 1 percent due to procurement of fodder and drilling of boreholes for drought relief. 36

Transport 37

Transport cont. • Overall the department spent R 1. 725 billion or 99. 3 percent of the budget of R 1. 738 billion and underspending of R 12. 5 million or 0. 7 percent. • The Department underspent: Ø Goods and Services - R 7. 4 million or 3. 6 percent because of delays in the purchase of road safety materials procured through Road Traffic Management Corporation funding. Ø Transfers and subsidies - R 13. 3 million or 1. 8 percent due to savings generated on penalties for bus subsidies. Ø CAPEX - R 9. 3 million or 22. 2 percent due to delay in the implementation of remedial construction of Thohoyandou Intermodal transport facilities. • Co. E overspend by R 17. 4 million or 2. 3 percent due to salary notch adjustments of traffic officers. 38

Co. GHSTA 39

Co. GHSTA cont. • Overall the department spent R 2. 2 billion or 81. 0 percent of its R 2. 7 billion budget recording underspending of R 511. 0 million or 19. 0 percent. • The underspending is due to: Ø Co. E - R 11. 1 million or 1. 3 percent due to the delay in filling funded vacant posts. Ø Goods and Services - R 3. 8 million or 2. 4 percent due to delays in receipt of invoices for rendered services. Ø Transfers and subsidies - R 493. 1 million or 29. 4 percent due to slow progress in housing projects (shortage of materials) under Human Settlements grant (rollover request has been made). Ø CAPEX - R 2. 9 million or 46. 1 percent due to delays in delivery of departmental GG vehicles. 40

Sport, Arts and Culture 41

Sport, Arts and Culture cont. • Overall the department spent R 377. 3 million or 95. 1 percent of the budget of R 396. 6 million which resulted in underspending of R 19. 3 million. • The underspending is due to: Ø Co. E - R 6. 8 million or 4. 5 percent due to the late filling of vacant posts mainly under Mass Sport and Recreation Programme. Ø Goods and Services - R 1. 9 million or 1. 1 percent due to savings realised on procurement of goods and services. Ø Transfers and subsidies - R 1. 0 million or 9. 4 percent due to over projected leave gratuities. Ø CAPEX - R 9. 4 million or 15. 4 percent due to delayed delivery of modular libraries as a result of community protest - Community Library grant (rollover request has been made). 42

Safety, Security and Liaison 43

Safety, Security and Liaison cont. • Overall the department spent R 82. 7 million or 93. 3 percent of the budget of R 88. 7 million. • The department underspend by R 5. 9 million or 6. 7 percent as follows: Ø Co. E - R 3. 6 million or 5. 9 percent due to filling of posts through promotions resulting in the underspending on COE. Ø Goods and services - R 2. 2 million or 8. 4 percent due to delays in payment of contractor as result of disputes being lodged on the project. Ø CAPEX - R 0. 120 million or 14. 8 percent due to the non delivery of Dot Matrix printer and installation of firewall. 44

Office of the Premier 45

Office of the Premier cont. 46 • Overall the department spent R 339. 3 million or 96. 8 percent of the budget of R 350. 6 million. The department underspent by R 11. 2 million or 3. 2 percent. • The underspending is as a result of: Ø Co. E - R 3. 4 million or 1. 4 percent due to the delays in filling of vacant funded positions. Ø Goods and Services - R 7. 6 million or 8. 0 percent due to the delay in the finalisation of planned projects. Ø CAPEX - R 0. 233 million or 8. 6 percent due to misallocations of financial leases under Goods and Services, journals are being finalised.

Provincial Legislature 47

Provincial Legislature cont. 48 • Overall the Legislature spent R 297. 3 million or 96. 6 percent of the budget of R 307. 8 million. • The Legislature underspent its budget by R 10. 5 million or 3. 4 percent on: Ø Co. E - R 3. 9 million or 2. 5 percent due to delays in filling of vacant funded positions Ø Goods and Services - R 6. 9 million or 12. 5 percent due to delay in processing of invoices. Ø CAPEX - R 1. 9 million or 15. 8 percent due to the delay in the procurement processes • The Legislature overspent its Transfer payments by R 2. 0 million or 2. 4 percent due to the payment of previous financial years arrear political party staff’s performance bonus.

Provincial Treasury 49

Provincial Treasury cont. 50 • Overall the department spent R 362. 8 million or 96. 9 percent of the budget of R 374. 3 million. • The department underspent its budget by R 11. 5 million or 3. 1 percent. Ø Co. E - R 17. 6 million or 7. 0 percent due to delayed filling of funded vacant posts. Ø CAPEX - R 0. 586 million or 7. 1 percent due to delays in the implementation of LOGIS and late appointment of service providers to install security-scanning machines. • The department overspent its budget on Ø Goods and services by R 4. 3 million or 4. 1 percent due to the need to pay high court legal fees. Ø Transfers and subsidies by R 2. 1 million or 33. 9 percent due to payment of unplanned for leave gratuities as a result of early retirements.

Economic Development 51

Economic Development cont. • Overall the department spent R 1. 115 billion or 99. 4 percent of the budget of R 1. 160 billion. • The department underspent its budget by R 6. 8 million or 0. 6 percent on: Ø Co. E - R 9. 7 million or 2. 1 percent due to delay in appointments. Ø CAPEX - R 2. 9 million or 18. 5 percent due to prolonged processes in the construction of market stalls. • The department overspent its budget on Ø Goods and services by R 2. 6 million or 1. 4 percent due to escalating prices of contractual obligations. Ø Transfers and subsidies by R 3. 2 million or 0. 7 percent due to payment of unplanned leave gratuities. 52

53 Details on Provincial Compensation of Employees

Compensation of Employees 54 54

STATUS QUO – PERCENTAGE SHARE 55 55

STATUS QUO by ANALYSIS - HEADCOUNT Headcount Trends Province- 2010/11 to 2015/16 56

57 Provincial Compensation of Employees • Personnel numbers have been reducing steadily over the past three years however personnel costs are increasing as a result from factors that include annual increments, implementation of Occupational Specific Dispensation (OSD), re-grading of posts as well as personnel incentive reforms. • Having realised these challenges, the Provincial Treasury introduced ring-fencing of personnel budgets in departments during the 2015/16 financial year which resulted in R 578. 4 million saving which was allocated to service delivery programmes. • More effort is required to curb the escalating costs of personnel against the provincial available budget.

Current Intervention to address Co. E • The Provincial Treasury has developed a Provincial Personnel Management Framework which is in the process of approval by the Executive Council. • The framework incorporates all personnel management issues and will assist to ensure reduction of personnel numbers and personnel costs in the province. • The framework address amongst others: – – – – Establishment of a Provincial Personnel Management Committee, Review of Organisational structures, Alignment of Organisational structures to Human Resource Management plans, Appointments, Acting allowances and Terminations, Management of overtime and Performance rewards, Centralisation of PERSAL appointment function, Management of government subsidies, and Management of appointment in EA offices. 58

59 Details on Provincial Goods and services

Goods and Services 60 60

61 Provincial Infrastructure Spending

Provincial Infrastructure Expenditure Performance Economic Cluster • Actual expenditure is R 1. 9 billion or 92 percent of the total budget with underspending of 8 percent. • Expenditure has improved as compared to 72 percent in 2013/14 and 73 percent in 2014/15. 62

Provincial Infrastructure Expenditure Performance 63 Economic Cluster cont. Agriculture: • Actual expenditure R 128 million or 76% of its infrastructure budget due to project and programme management expertise challenges. • The Departmental Infrastructure Coordinating Committee (DICC) was established to support and monitor projects and budgets. • The Government Technical Advisory Centre (GTAC) appointed to support the department in implementation of projects over the 2016/17 MTEF.

Provincial Infrastructure Expenditure Performance Economic Cluster cont. Transport: • Actual expenditure R 5. 1 million or 52% of its infrastructure budget due to the following: Ø Thohoyandou Intermodal Facility – the project was completed in April 2013 and has not been opened due to structural problems. The project design was discovered to be below standard thus rendering the building unsafe leading to underspending. All tests have been completed and remedial construction is in progress. Ø Limpopo Traffic Colleges – a feasibility study was done to decide the viability of current and the proposed locations. 64

Provincial Infrastructure Expenditure Performance Economic Cluster cont. LEDET: • Actual expenditure is R 64 million or 95% of its infrastructure budget. • Under-spending is a result of work stoppages due to community disputes and slow implementation of projects. • GTAC appointed to support the department in implementation of projects over the 2016/17 MTEF. 65

Provincial Infrastructure Expenditure Performance Economic Cluster cont. 66 Public Works, Roads And Infrastructure: • Actual expenditure R 1, 69 billion or 93% of its infrastructure budget. • Underspending due to late transfer of household projects and challenges in finalizing the evaluation due to high number of tenders submitted. Contractors have been appointed. • EPWP Household based road routine maintenance programme has been introduced wherein road maintenance projects linked to the 25 local municipalities are implemented. • Repair of pothole is mainly carried by departmental teams as part of routine maintenance. • Other critical road maintenance material items identified for procurement through term contracts to speed up delivery.

Provincial Infrastructure Expenditure Performance Social Cluster • Actual expenditure R 2. 9 billion or 84 percent of the total budget with an underspending of 16 percent. • Expenditure improved in 2014/15 from 71 percent to 87 percent and reduced to 84 percent in 2015/16. 67

Provincial Infrastructure Expenditure Performance Social Cluster cont. 68 Education: • Actual expenditure R 1. 1 billion or 100 percent • The Do. RA human resource capacitation and deployment of infrastructure professional from the Infrastructure Strategic Planning Hub (ISPH) has stabilised the department. • Additional funding was allocated during adjustment from ES by the province and also during second adjustment by National from EIG Health: • Actual expenditure R 601. 9 million or 96 percent of its infrastructure budget. • The Do. RA human resource capacitation and deployment of infrastructure professional From the Infrastructure Strategic Planning Hub (ISPH) including the use of alternative IAs i. e. DBSA has stabilised the department. • Infrastructure planning has stabilized.

Provincial Infrastructure Expenditure Performance Social Cluster cont. Co. GHSTA: • Actual expenditure R 1. 124 billion or 71 percent of its infrastructure budget. • The department has appointed the Housing Development Agency (HDA) to monitor the construction of houses and assist with the acceleration of projects. • The option of appointing more contractors with less manageable units to improve spending is initiated. Appointment of contractors for 2016/17 financial was done during third quarter of 2015/16 so that construction can commence before the beginning of the financial year and payments effected from April 2016 onwards. • Poor performing contractors are penalized by reducing the number of units allocated to them. 69

Provincial Infrastructure Expenditure Performance Social Cluster cont. Social Development: • Actual expenditure R 16. 7 million or 48 percent of its infrastructure budget. • Challenges encountered with completion of Seshego treatment centre due to subcontractors dispute and liquidation of main contractor. An estimated payment of R 10. 0 million was supposed to be expended on this project and resulted in significant underspending. • GTAC has been appointed over the 2016/17 MTEF to enhance the capacity of the department to deliver infrastructure. 70

Provincial Infrastructure Expenditure Performance Social Cluster cont. Sport, Arts and Culture • Actual expenditure R 29. 9 million or 53 percent of its infratrusture budget. • There are still considerable challenges pertaining to the delivery of library infrastructure - Delays by IDT to complete the projects and late change of planned building site. • The department is building its own capacity to deliver infrastructure, personnel have been appointed during third quarter. GTAC has also been contracted to provide support and enhance the capacity of the department. 71

72 Provincial Cash Flow Management

Cash Flow Management • The provincial government has scheduled its payments runs and allocated funds for each run. • During 2015/16 payments were scheduled as follows: Ø Persal (Normal Salary) = as scheduled by National Treasury Ø Persal (Supplementary payments) – 1 run per month for payment action date of the last Monday of the month. Ø BAS (Supply payments) = 2 runs per month for the payment action date of the 15 th and month-end. • The province used the CPD account as its only investment portfolio where its Equitable Share is deposited by National Treasury and withdrawn on need basis in line with its payment schedule. • The province also used the CPD account to transfer its Exchequer Account surpluses to generate interest. 73

Cash Flow Management cont. • Exchequer Account surpluses results from the own revenue paid by departments and Conditional Grants that flow when Equitable Share was already used to meet departments’ cash requirements. • Provincial Treasury issued Cash Allocation Letters with clear payment processes that departments must adhere to to ensure that they do not exceed their cash allocations and ultimately their appropriations. • Funds are transferred to departments in line with payments disbursed as well as the disbursement schedule. • The challenge remains slowness of BAS system in payments processing which is receiving attention. 74

30 Day Payments AVERAGE COMPLIANCE RATE (Apr 2015 - March 2016): 90. 24% 75

Month-end Bank Account Balances 76

ACCURALS AND DISBURSEMENTS Disbursements = Payments made in March 2016 but only processed through bank in April 2016 77

Provincial Cash Flows cont. 78

Provincial Cash Flows cont. • Closure of dormant accounts: Ø Disaster Relief Fund account and Development Fund account were closed with balances amounting R 4. 295 million which was transferred into Exchequer Account. Ø Local Economic Development account funded by European Union, managed by Co. GHSTA was closed with balance of R 28. 362 million transferred to Exchequer Account and ultimately surrendered to National Treasury. • RDP Funds, amounting R 2. 500 million, not spent by Health was surrendered by department and ultimately surrendered to National Treasury. • Trend of favourable balance CPD Account in SA Reserve Bank has yielded an amount of R 286. 809 million in interest as at 31 March 2016. 79

Provincial Debt/Overdraft 80 • The province does not have any form of borrowing or overdraft facility in use since its recovery from the impact of accumulated unauthorised expenditure. • The province has just funded the balance of R 368 million in Education which the department cleared and surrendered its outstanding voted funds to be surrendered to Exchequer Account in March 2016. • There is overdraft facility in the CPD account which the province has not used in the past 4 years.

81 Unauthorized, Irregular and Wasteful Expenditure

82 UNAUTHORISED PFR FUNDING DEPARTMENTS APPROVED WITH TOTAL TO BE FUNDING by FUNDED BY LEGISLATURE PRF APPROVED WITHOUT WITH FUNDING not FUNDING yet cleared Funded in 2012/13 Funded in 2013/14 Funded in 2014/15 Legislature Education Agriculture Provincial Treasury Economic Developmet Health Roads & Transport Public Works Satety, Security & Liaison Local Government & Housing Social Dev Sport, Arts & Culture - TOTAL OUTSTANDING Funded in 2015/16 2011/12 Premier Considered by SCOPA awaiting Legislature Resolution 2011/12 2012/13 2013/14 2014/15 32 038 - - - 1 127 22 924 24 051 - - - 449 400 1 395 844 - - 1 845 244 449 400 728 708 299 136 368 000 - - 42 234 - 132 978 99 667 15 618 4 806 295 303 - - - 6 803 - - - 2 203 - - - 274 805 - - 25 034 - - - 256 261 25 034 18 544 - 222 381 - - - 663 - - - - 7 141 7 001 748 492 1 469 350 7 001 - 2 217 842 821 998 728 708 299 136 368 000 228 7 141 42 234 132 978 322 276 15 618 4 806 525 053

83 Unauthorized, Irregular and Wasteful Expenditure cont. . PRE 2015/16 AUDIT OUTCOMES Vote # Unauthorised Expenditure Fruitless & Wasteful Expenditure Irregular Expenditure Total % To Total R’ 000 Total 1 0 1 862 0. 04% 2 0 2 198 0. 04% 3 295 303 2 726 917 168 415 3 190 635 64. 60% 4 0 75 945 1. 54% 5 0 0 119 0. 00% 6 0 7 975 986 8 961 0. 18% 7 222 381 787 053 247 008 1 256 442 25. 44% 8 0 1 154 614 1 768 0. 04% 9 0 93 409 4 344 97 753 1. 98% 10 228 2 435 81 2 744 0. 06% 11 0 487 76 346 76 833 1. 56% 12 0 89 008 10 736 99 744 2. 02% 13 7 141 116 007 1 094 124 242 2. 52% 525 053 3 904 450 509 743 4 939 246

Conclusion • The Province has achieved 98. 3 percentage spending on its overall allocated budget and managed to collect 104. 7 percent of the Provincial Own Revenue target. • The Provincial Treasury monitor provincial spending on a regular basis and conducts quarterly bilateral meetings with departments where each departmental Executive Management accounts to the MEC for Finance in the presence of the departmental Executing Authority. • Budget and expenditure performance is also reported monthly to the HOD’s forum and Executive Council. • These engagements have assisted the province in the alignment of key priority area to the available resources and ensuring funds appropriated are utilised for intended purpose with minimal wastage. 84

85 Thank you!!!