Home News Overspending threatens NC’s future, says MEC

Overspending threatens NC’s future, says MEC

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Tough decisions and choices were inevitable, and, in order to improve the lives of the people, “we must first endure short-term pain to reap long-term and meaningful future benefits”.

Maruping Lekwene

THE NORTHERN Cape MEC for Finance, Economic Development and Tourism, Maruping Lekwene, has warned that continuous overspending by some government departments could threaten the future sustainability of the Province.

Delivering the provincial Treasury’s budget speech in the Northern Cape Legislature yesterday, Lekwene stated that the new administration “had inherited a massive cumulative unauthorised expenditure which is an indication of evolving financial problems as a result of continuous overspending by some departments and accruals which are not cash backed – a situation that if ignored or unresolved will threaten the future sustainability of the Province and seriously compromise our social programmes”.

At the end of the 2018/19 financial year, the Province had cumulative debt which consisted of
R921 million of unauthorised expenditure, excluding accruals that are not cash backed.

“While it may be difficult to accomplish the task of reducing this debt over a five-year mandate, given pressing and competing priorities, our preliminary projections indicate that by 2023/24 this debt will be minimised to zero provided that no department is allowed to overspend.”

Lekwene warned, however, that tough decisions and choices were inevitable, and, in order to improve the lives of the people, “we must first endure short-term pain to reap long-term and meaningful future benefits”.

He stated that strict austerity measures without compromising service delivery needed to be implemented. “The common enemy is poverty, unemployment and inequality and these cannot be ignored.”

He added that revenue collection, both at a provincial and local government level, would be increased, while the Provincial Preferential Procurement Framework (PPPF), which promotes local procurement to stimulate the local economy, would also be fully implemented.

Municipalities would be supported to improve their financial reporting and institutionalising good governance in order to improve service delivery, while departments would be monitored and supported on non-compliance matters.

In terms of the Preferential Procurement Policy Framework, which was approved in December 2018, the aim is to increase local procurement to 60%.

“At the end of the 2018/19 financial year, provincial government spending trends indicated that 40% of all procurement was from suppliers based in the Northern Cape, of this 85% was procured from black-owned companies, 31% was procured from women-owned companies, and 16% was procured from youth-owned companies.”

Lekwene added that the provincial government had also embarked on a process to investigate the viability of insourcing certain commodities, such as cleaning and security services.

“Provincial Treasury has successfully put in place mechanisms to reduce late payments. However, we cannot overemphasise the importance of paying our suppliers on time, due to the impact it has on the survival and sustainability of businesses. We managed to remain below the 10% deviation norm for late payments and have seen a reduction in late invoices.”

According to Lekwene, 15 local municipalities have been identified that need provincial Treasury’s attention due to their financial position. These municipalities include Nama Khoi, Ubuntu, Emthanjeni, Kareeberg, Siyancuma, Renosterburg, Tsantsabane, Joe Morolong, Kgatelopele, Phokwane, Siyathemba, Ga segonyana, Magareng, Dikgatlong and Kai! Garib.

“These municipalities are plagued with a variety of issues that hamper effective service delivery to our communities. We have commenced with identifying gaps in the financial management area. Strategies will be developed and included in the respective financial recovery plans. The implementation of the financial recovery plan is essential to the sustainability of the municipality.”

The total budget of the department is R313 million. This will be distributed as follows:

Administration – R106 million.

Sustainable Resource Management – R79 million (this includes funds set aside for the municipal intervention unit, building capacity within the district offices and funds for priority projects that will improve the financial sustainability of municipalities).

Asset and Liabilities – R59 million (including the capacitation of the supply chain and asset management units).

Financial Governance – R29 million.

Internal Audit – R38 million.