north west presentation on conditional grants and infrastructure funds expenditure for the second...

North West Presentation on Conditional Grants and Infrastructure Funds Expenditure for the Second Quarter 2007/08

IntroductionThis financial report relates to the second quarter expenditure for the 2007/08 financial year.

It covers the period 1st April 2007 to the 30th September 2007

Expenditure for this period under review is estimated at 50%.

Provincial Summary Conditional Grant FundsThe conditional grant budget is R2 000 647 000.00 (R2 billion) for the 2007/08 financial year.Expenditure on the conditional grants equals 44% of approved budget which is a mere 6% short on the estimated 50%. Based on the funds transferred in terms of the Division of Revenue Act, which amounts to R1 009 551 000.00 (R1 billion) the province spent R889 453 000.00 which equals 88% expenditure.

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Conditional Grant Allocations within the North West Provincial DepartmentsApproved Budget 2007/2008Expenditure as at 30/09/2007% Spent of Budget 2007/08

Department of Health523,331241,78446%

Department of Sport, Arts and Culture38,5009,58225%

Department of Education212,50787,39041%

Department of Local Government and Housing766,806336,34344%

Department of Transport, Roads and Community Safety401,740197,26549%

Department of Agriculture, Conservation and Environment57,76317,08930%

Total Conditional Expenditure for 2007/082,000,647889,45344%

Provincial Summary Infrastructure FundsThe infrastructure budget equals R2 354 284 000.00 (R2.3 billion) for the 2007/08 financial year.Expenditure on the Infrastructure funds equals 43% of approved budget which is a mere 7% short on the estimated 50%. Based on the funds transferred in terms of the Division of Revenue Act, which amounts to R1 094 860 000.00 (R1 billion) the province spent R1 003 053 000.00, which equals 92% expenditure.

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Total Infrastructure Allocations (includes some conditional grants) within the North West Provincial DepartmentsApproved Budget 2007/08Expenditure as at 30/09/2007% Spent of Budget 2006/07

Office of the Premier9,0003,81242%

Department of Health302,207156,04252%

Department of Sport, Arts and Culture50,91211,58623%

Department of Economic Development67,9500.00%

Department of Education236,50594,33240%

Department of Local Government and Housing859,377406,34347%

Department of Transport, Roads and Community Safety515,039219,08543%

Department of Public Works152,48578,55952%

Department of Social Development53,6336,61612%

Department of Agriculture, Conservation and Environment107,17626,67825%

Total Infrastructure Expenditure for 2007/082,354,2841,003,05343%

Provincial Summary Personnel & Non-Personnel ExpenditureThe total provincial budget is R14 587 128 000.00 with expenditure of R6 893 055 00.00 which equals 47% which is 2% more than the same period in the previous financial year when expenditure was at 45%.

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EconomicApproved Budget 2007/08Expenditure as at 30/09/2007% Spent of Budget 2007/08Approved Budget 2006/07Expenditure as at 30/09/2006% Spent of Budget 2006/07

Classification

Current Expenditure13,255,2726,420,70648%13,388,7586,040,69645%

Compensation of employees7,843,6194,028,21551%8,552,1534,161,60049%

Transfer payments2,236,1851,031,77746%1,796,235728,80641%

Administrative expenditure483,848261,59254%481,800227,98647%

Stores1,048,733422,58640%1,054,970334,76332%

Professional and special services611,571232,71038%502,252197,84539%

Other goods and services1,031,316443,82643%1,001,348389,69639%

Capital Expenditure1,331,856472,34935%1,281,237536,05342%

Equipment319,77774,92323%342,54145,32413%

Land and Buildings531,824200,16138%505,678271,23454%

Infrastructure480,255197,26541%432,506219,49551%

Other Capital Expenditure0.00.00%5120.00%

Total Provincial Expenditure14,587,1286,893,05547%14,669,9956,576,74945%

Provincial Summary Personnel & Non-Personnel ExpenditureExpenditure on compensation of employees and administrative expenditure is 51% and 54% respectively and is mostly attributed to the budget shortfall based on the demarcation more prevalent within the provincial Department of Education.

The Department of Education projected an overspending on personnel expenditure of approximately R1 billion for the current financial year.

This estimated over expenditure within the Department of Education is currently being investigated as the provincial treasury is concerned as to why the personnel expenditure remains almost the same as in previous years, despite the fact that an estimated 6000 staff members were transferred to Gauteng and Northern Cape based on the demarcation.

Provincial Summary Personnel & Non-Personnel ExpenditureThe personnel expenditure appear to be high at this stage.

The provincial treasury are taking precautionary measures to reduce the impact of personnel expenditure in the province by discouraging the departments to appoint additional unnecessary staff that can result in an increased fixed cost over the 2008/09 MTEF.

Furthermore, the provincial treasury urged the provincial departments to surrender savings under the compensation of employees to the provincial revenue funds during the adjustment budget.

NW Office of the Premier Infrastructure FundsThe Office of the Premier has spent 42% of their approved budget with the unspent funds already committed to complete the maintenance and construction of four traditional council offices.

There was a slight delay in construction of approximately three months, based on the failure to observe occupational health and safety standards at Ba Ga Mankuroane; however construction has resumed as the OHS is now observed.

The other three traditional council offices are 98% complete with their claims to be paid during the third quarter.

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Infrastructure funds allocations for the Office of the PremierApproved Budget 2007/08National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/08

R' 000R' 000R' 000%

Maintenance & Upgrading of Traditional Leaders Properties (Equitable Share)9,0004,5003,81242%

Total Expenditure of 2007/08 funds9,0004,5003,81242%

NW Department of HealthThe department spent average 48% of their conditional grant and infrastructure funds to date with lowest overall spending of 37% and 39% on National Tertiary and Forensic Pathology Services conditional grants.However, taking into account the funds transferred from National for these two grants, then the department did very well as they then spent 74% and 78% respectively.

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Conditional Grant and infrastructure funds allocations for the Department of HealthApproved Budget 2007/08National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/08

R' 000R' 000R' 000%

Hospital Revitalisation C/Grant176,96688,48474,81242%

Health Professionals Training and Dev. Grant65,69232,84443,68466%

Comprehensive HIV and AIDS Grant156,42978,21065,43842%

National Tertiary Services Grant81,40940,70430,14237%

Forensic Pathology Service Grant22,83511,4188,91039%

Infrastructure Conditional Grant20,00019,29018,79894%

Sub-total Conditional Grants523,331270,950241,78446%

Health Routine Maintenance (Equitable Share)45,24122,62119,06342%

Clinic Building (Equitable Share)60,00030,00043,36972%

Sub-total Infrastructure Funds302,207394,983156,04252%


NW Department of HealthForensic Pathology Services:The purchase of vehicles and office equipment @ R2.7million has been made and payment will be reflected during third quarter.Tender process for the construction of two new mortuaries commenced.

National Tertiary Services expenditure was incurred against another programme and journals would be passed to rectify the expenditure.

Hospital Revitalization Grant expenditure is slightly improving although the performance of the contractors at the Moses Kotane and Vryburg Hospitals are still behind schedule. Meetings were held to improve the contractors performance which should be visible during the third quarter as special attention is given in monitoring and interacting with the contractors.

The department indicated that additional funds may be required for the clinic building programme.

NW Department of Sport, Arts and CultureThe department has spent average of 24% of their approved budgets.Except for the conditional grant and archive funding most of the expenditures are in fact transfers to Municipalities and is evaluated and reported on by the department and are closely monitored by the provincial treasury during 2007/08.The spending on the archive building is very slow based on the inability of the first contractor. A new contractor was appointed to complete the project and the department indicated that R15 million on this project will be surrendered during the adjustment budget to other departments with infrastructure pressures.The Community Library Services Grant spent a mere 3% as a result of the late planning, tendering procedures, staff recruitment and training; which will be finalized with appointments being made during the third quarter.

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Conditional Grant and infrastructure funds allocations for the Department of Sport, Arts and CultureApproved Budget 2007/08National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/08

R' 000R' 000R' 000%

Mass Sport And Recreation Conditional Grant16,9008,6509,00353%

Community Library Services Grant21,60010,8005793%


Libraries10,5005,2501,48114%

Archive building25,01912,5102,63911%

Cultural Centres3,0001,5001,00033%

Maintenance of sport facilities5,0002,5004,25985%

Maintenance of museums / Arts1,00050026727%

Maintenance of Libraries2,0001,00024312%

Infrastructure Sport4,3932,1971,69739%



NW Economic Development and TourismThe department has spent 0% of their approved budget which is a grave area of concern.The lack of project management and planning expertise and capacity within the department to manage and drive development projects.The department further failed to provide the required infrastructure business plans for the 2007/08 projects and only submitted at the end of August beginning September 2007.The Infrastructure plans was approved and this resulted in cash flows only made available for infrastructure projects during September 2007 and expenditure would be reflected during the third quarter.However, it is highly unlikely that the department will spend their full infrastructure budget during 2007/08. The department agreed that any estimated unused funds will be surrendered during the adjustment budget to fund shortfalls or pressures on other infrastructure projects within other provincial departments.

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Infrastructure funds allocations for the Department of Economic Development and TourismApproved Budget 2007/08National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/08

R' 000R' 000R' 000%

MIDZ Infrastructure30,00015,0000.00%

Madibeng Dry Port3,2001,6000.00%

Beef Benefication3,0001,5000.00%

Light Industrial Parks3,0001,5000.00%

Madikwe Sisal Project1,0005000.00%

NW Parks and Tourism (Park Expansion)5,0002,5000.00%

Mining Supplies Park10,0005,0000.00%

Industrial Park Refurbishment (NWDC)10,0005,0000.00%

Wild Silk7503750%

Afthatch Project2,0001,0000.00%

Total Expenditure of 2007/08 funds67,95033,9750.00%

NW Department of EducationThe departments expenditure of 44% is fairly on track at this stage, with overall low expenditure of 22%, 24% and 28% on the School building programme, HIV/AIDS and Infrastructure conditional grants respectively. Taking into account the funds transferred from national then the expenditure equals 43%, 62% and 56%.Final accounts on the infrastructure projects are being expedited and would be paid during the third quarter and contractors commenced during September to complete the school building projects regarding sanitation based on delayed planning and tendering.Budget pressures exist based on schools that were damaged in the disaster-struck areas.The main concern is that the department estimated an over expenditure on the National School Nutrition Programme conditional grant that negatively impacts on the school feeding scheme and assistance is required from the National Department of Education.Although weaknesses exist in terms of project management expertise and staff the intervention of the (IDIP) programme is already assisting to address and bridge the required capacity constraints.

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Conditional Grant and development funds allocations for the Department of EducationApproved Budget 2007/08National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/08

R' 000R' 000R' 000%

National School Nutrition Programme C/ Grant87,91643,95849,25556%

HIV and AIDS (Life skills education) C/ Grant11,4935,7463,22128%

FET Colleges Recapitalization C/ Grant28,72514,36314,34350%

National Treasury Infrastructure C/ Grant84,37333,15020,57124%


School Building Programme (Equitable Share)43,04421,5229,27622%

School Maintenance (Equitable Share)77,99338,99750,50965%

Donated Funds: Netherlands Embassy13,99813,9986,08243%

Sub-total Infrastructure Funds236,505107,66794,33240%


NW Department of Local Government and Housing The Department has spent 47% on their conditional grant and infrastructure funds.

The zero expenditure on the Disaster management funds are a concern. The approved business plans are awaited and the department awaits the MOAs from the four district municipalities as well as the confirmed tendering procedures from the municipalities to effect future payments.

The department indicated that these funds are committed to projects that will commence during the third quarter.

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Conditional Grant and development funds allocations for the Department of Local Government and HousingApproved Budget 2007/08National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/08

R' 000R' 000R' 000%

Integrated Housing & Human Settlement Development Conditional Grant766,806395,325336,34344%

Bucket Replacement (Equitable Share)70,00035,00070,000100%

Disaster Management Fund (Equitable Share)20,00010,0000.00%


NW Department of Transport, Roads and Community SafetyThe Department has spent 43% of their approved funds and indicated that the current funds might be exhausted by early during the fourth quarter.

Some EPWP and maintenance projects were slightly delayed; contractors are now on site resulting in improvement progress and delivery with expenditure trends to normalize during the third quarter.

The department has indicated that additional funds can be utilized to address some urgent pressing resealing and rehabilitation of roads during this year.

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Conditional Grant and development funds allocations for the Dpepartment of Transport, Rodas and Community SafetyApproved Budget 2007/2008National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/2008

R' 000R' 000R' 000%

Roads Infrastructure NCIGrant401,740200,616197,26549%

EPWP Roads projects14,0007,0001,63112%

Roads Maintenance59,07129,53616,34128%

Best Practise Model2,0001,0001,51676%

New Road Development38,22819,1142,3316%


NW Department of Public WorksThe Department of has spent 52% of their approved funds.The shortage of professionally skilled personnel in areas such as engineering, architecture, quantity surveyors, etc. and inability to recruit and retain technical staff is still a major challenge.The department have recruited three professionals already through the IDIP process which is paid by the provincial treasury as part of capacity building and skill transfer project and improvement is envisaged during the year.Program managers were duly appointed as an interim solution to assist and to manage the infrastructure projects and monthly meetings with client departments is revived.The department are supportive of the Infrastructure Delivery Improvement Programme (IDIP) and apart from this department; the fruits of this programme are seen within the department of Education and Health.

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Infrastructure funds allocations for the department of Public WorksApproved Budget 2007/2008National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2007/2008

R' 000R' 000R' 000%

Government Building-Major Renovations42,35021,17531,68075%

Gov Bldg - Day to Day Maintenance "EPWP"40,90420,45213,49533%

Regional Office: Public Works4,6752,3384,52197%

New Government Buildings50,00025,00023,73647%

Gov Bldg - Day to Day Maintenance "EPWP"14,5567,2785,12735%


NW Department of Social DevelopmentThe Department has spent 12% of their infrastructure funds.

The late start on the new facilities such as the Victim Empowerment centres and the Childrens homes resulted in under spending at this stage.

The third Secure Care Centre in Bojanala is under construction and running smoothly with completion during 2007/08.

However, it is doubtful that the department will spend all their funds during this year and may have to surrender some funds during the adjustment budget.

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Infrastructure funds allocations for the Department of Social DevelopmentApproved Budget 2007/2008National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2006/2007

R' 000R' 000R' 000%

Child Care Protection Services (Places of Safety)25,00012,5003411%

Crime Prevention Support (Secure Care Centres)18,6339,3176,27534%

Victim's Empowerment Centres10,0005,0000.00%


NW Department of Agriculture, Conservation and EnvironmentThe Department of has spent 25% their funds, which is below the estimated 50%.Project coordination unit was strengthened through the appointment of three agricultural engineers/technicians to improve delivery as from third quarter.Crop production farmers will be supported by mechanization packages and through advanced training for tractor operators.Some agricultural projects are dependant on seasons such as dry land crop production mainly from October to May therefore expenditure can only be realized during this period.The delay in compiling the specifications and completion of surveys for the Fire Belts programme is resolved and the procurement processes are being finalized and contractors are to be appointed.The Nguni Cattle Development projects was delayed based on the access to land; however discussions were held with the Provincial Land Reform office with a view of pro-actively acquiring land and allocating it to potential Nguni project beneficiaries in future.The design plans and specifications for the multipurpose livestock handling facilities are completed with tenders for construction of pounds in adjudication phase and the contractors to be appointed in November 2007.The concern still exists on whether the approved budgeted amount will be spent this year, despite the above mentioned actions that was be implemented. The department might have to consider surrendering some funds during the adjustment budget or bring future planned projects forward.

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Conditional Grant and development funds allocations for the Department of Agriculture, Conservation and Environment.Approved Budget 2007/2008National Transfers 30/09/2007Expenditure as at 30/09/2007% Spent of Budget 2006/2007

R' 000R' 000R' 000%

Land Care: Poverty Alleviation and Infrastructure: C/ Grant4,6722,1022,75359%

Comprehensive Agriculture Support Programme: C/ Grant53,09123,89114,33627%

Agricultural Support on Communal Land (Equitable Share)10,0005,0005315%

Post Settlement Support Services (Equitable Share)30,00015,0005,61819%

Heritage Site Maintenance (Equitable Share)9,4134,7073,44037%

Total expenditure of 2007/08 funds107,17650,70026,67825%

Concluding RemarksThe NW provincial treasury enhanced budgetary and cash flow controls with improved monthly and quarterly performance reports to monitor the impact on service delivery and actual expenditure on conditional grants and infrastructure/development funds.

There is constant improvement in the conditional grant and infrastructure funds spending based on the supporting interventions by the provincial treasury and the commitment of the provincial departments to improve their service delivery and spending.

The monthly expenditure and quarterly performance reports obtained from the provincial departments allow the provincial treasury to monitor, intervene and assist in the improvement of service delivery and to verify compliance in terms of the legislative frameworks such as the Division of Revenue Act, PFMA, etc. The rollout of the Infrastructure Delivery Improvement Programme (IDIP) within the province and the active involvement of the Provincial Treasury with the Provincial Departments of Education, Public Works and Health and the National Treasury definitely revealed positive results in the infrastructure planning, delivery and management.

THANK YOUThe current financial pressure within the Department of Education is being investigated by the provincial treasury to verify actual expenditure, confirm the personnel headcount and a detailed analysis and means to normalize expenditure trends.

The NW provincial treasury will continue to meet provincial departments regularly to facilitate the acquiring of resources, requisite skills to improve budget planning and spending capacity and to address areas where there are risks of both over and under spending.Concluding Remarks

north west presentation on conditional grants and infrastructure funds expenditure for the second...

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