Presentation to Portfolio Committee on Economic Development QUARTER 1 2014/15 FINANCIAL REPORT 2 September 2014 2018/05/15

Introduction The Department spent R161 173 000 including transfers - That is 91% of its quarterly budget allocation of R177 345 000. The Department has four budget programmes: Administration Economic Policy Development Economic Planning and Coordination Socio Economic Development and Social Dialogue Each Budget Programme is broken down into economic classification.

Expenditure review The Department spent R161 173 000 including transfers - That is 91% of its quarterly budget allocation of R177 345 000. Additional information will be provided on expenditure in accordance with the requirements of the PC Variance was mostly due to: Decision not to fill high-level posts while initiating restructuring of the EDD The use of personnel drawn from public entities for the PICC, paid for by state entities Funding obtained from the EU for EDD Conference on manufacturing, equality and growth, which represented a saving of R1,5 million on the budget The need to resolve contingent liability provisions for some expenditure (communications) Procurement delays around office space invoices and software for data analysis and modelling The Minister requested that EDD effect savings in order to increase support for key projects for small business

Q1 Financial Performance Total per Programme Programmes Q1 Projected Budget Actual Expenditure Variance % Spent R’000 % Administration 21 514 15 788 5 726 73% Economic Policy Development 5 461 3 088 2 373 57% Economic Planning and Coordination 146 538 139 872 6 666 95% Socio Economic Development and Social Dialogue 3 832 2 425 1 407 63% Total including Transfers 177 345 161 173 16 172 91% Total excluding Transfers 42 363 26 191 62%

Expenditure per Classification Q1 Financial Performance Total per Econ Classification Expenditure per Classification Q1 Projected Budget Actual Expenditure Variance % Spent R’000 % Compensation of Employees 26 968 17 937 9 031 67% Goods and Services 14 693 7 721 6 972 53% Transfers and Subsidies 134 982 - 100% Non Profit Institutions 60 Households 13 Payment of Capital Goods 629 460 169 73% Total including Transfers 177 345 161 173 16 172 91% Total excluding Transfers 42 363 26 191 62%

Q1 Financial Performance: GFS Variance Compensation of employees: EDD staffing model of permanent employment, secondments, utilisation of staff in other departments and entities, contract employment for projects, will continue. In addition, review of the structure of the department and staff re-alignment to meet the needs and demands that arise out of the new priorities of MTSF has resulted in caution in filling core high level vacant posts - they will be filled in line with the re-aligned Strategic Objectives and APP. Goods and services: Accruals (services rendered but not yet invoiced as at 30 June 2014), office accommodation; legal services; pre-payments made in line with the MoU to be accounted for in the second quarter. Capital: Finance leases (photocopiers (centralised under Administration) & cell phone contracts) planned for under goods and services – funds to be shifted

Programme expenditure Expenditure per Classification Administration – Q1 Financial Performance per Prog & Econ Classification Programme expenditure Q1 Projected Budget Actual Expenditure Variance % Spent R’000 % Administration 21 514 15 788 5 726 73% Expenditure per Classification Compensation of Employees 10 693 9 369 1 324 88% Goods and Services 10 298 6 067 4 231 59% Households 4 100% Payment of Capital Goods 519 348 171 67% Total

Q1 Financial Performance: Variance Administration Compensation of employees: As indicated, review of the structure of the department and staff re-alignment to meet the needs and demands that arise out of the new priorities of MTSF has resulted in caution in filling vacant high-level posts while process is being completed. Goods and services: Office accommodation costs for May & June still to be invoiced as at 30 June 2014; co-sourced internal audit services not yet invoiced; advance to be cleared once invoices are received. Capital: Finance lease costs that were planned for in goods and services but charged to capital in line with the Modified Cash Standard issued by OAG – Funds will be shifted during the AENE to augment the overspending

Programme expenditure Expenditure per Classification Economic Policy – Q1 Financial Performance per Prog & Econ Classification Programme expenditure Q1 Projected Budget Actual Expenditure Variance % Spent R’000 % Economic Policy Development 5 461 3 088 2 373 57% Expenditure per Classification Compensation of Employees 4 235 2 549 1 686 60% Goods and Services 1 189 502 687 42% Payment of Capital Goods 37 100% Total

Q1 Financial Performance: Variance Economic Policy Development Compensation of employees: As indicated, review of the structure of the department and staff re-alignment to meet the needs and demands that arise out of the new priorities of MTSF has resulted in caution in filling high-level vacant posts while process is being completed. Core posts will be filled in line with identified critical skills that will enable the attainment of the revised strategic objectives and related implementation plans (APPs). Goods and services: spending slow and is expected to improve in line with the revised APP that was approved in June 2014 that would enable the implementation of the MTSF and the re-aligned strategic objectives.

Programme expenditure Expenditure per Classification Econ Planning – Q1 Financial Performance per Prog & Econ Classification Programme expenditure Q1 Projected Budget Actual Expenditure Variance % Spent R’000 % Economic Planning & Coordination 146 538 139 872 6 666 95% Expenditure per Classification Compensation of Employees 9 343 4 005 5 338 43% Goods and Services 2 092 764 1 328 36% Transfers and Subsidies 134 982 100% Households 9 Non Profit Institutions 60 Payment of Capital Goods 52 Total

Q1 Financial Performance: Variance Economic Planning and Coordination Compensation of employees: As indicated, review of the structure of the department and staff re-alignment to meet the needs and demands that arise out of the new priorities of MTSF has resulted in caution in filling vacant posts while process is being completed. Core posts will be filled in line with identified critical skills that will enable the attainment of the revised strategic objectives and related implementation plans (APPs). The arrangement with public entities to retain PICC coordination personnel on their books, whilst benefitting EDD through savings in all three core programmes, has specifically helped effect savings in this programme. This facility is currently under review and it is likely that EDD will have to carry some additional staffing and other costs during this financial year Goods and services: spending slow and is expected to improve in line with the revised APP that was approved in June 2014 that would enable the implementation of the MTSF and the re-aligned strategic objectives.

Programme expenditure Expenditure per Classification Econo Dev & Dialogue – Q1 Fin Performance per Prog & Econ Classification Programme expenditure Q1 Projected Budget Actual Expenditure Variance % Spent R’000 % Economic Development & Social Dialogue 3 832 2 425 1 407 63% Expenditure per Classification Compensation of Employees 2 697 2 014 683 75% Goods and Services 1 114 390 724 35% Payment of Capital Goods 21 100% Total

Q1 Financial Performance: Variance Economic Development & Dialog Compensation of employees: As indicated, review of the structure of the department and staff re-alignment to meet the needs and demands that arise out of the new priorities of MTSF has resulted in caution in filling high-level vacant posts while process is being completed. Core posts will be filled in line with identified critical skills that will enable the attainment of the revised strategic objectives and related implementation plans (APPs). Goods and services: spending slow and is expected to improve in line with the revised APP that was approved in June 2014 that would enable the implementation of the MTSF and the re-aligned strategic objectives.

Overall remedies to improve spending Compensation of employees: Finalisation of restructuring of department will enable Core posts will be filled in line with identified critical skills that will enable the attainment of the revised strategic objectives and related implementation plans (APPs). However staffing model of permanent employment, secondments, utilisation of staff in other departments and entities, contract employment for projects, will continue Goods and services: Improved demand plans will be compiled in line with the recently developed project plans in order to improve spending in goods and services – this will not be an overnight achievement and progress should be seen over the rest of this financial year. Capital: Funds will be shifted from Goods and services in line with the Modified Cash Standard to ease the overspending in capital in order to accommodate the finance lease costs that are currently budgeted for in Goods and Services.

SIYABONGA!