as at 31 March 2016 NW Provincial Performance Presentation to the Select Committee on Finance Date: 20th May 2016 Presentation by: MEC For Finance, Economy and Enterprise Development Slide 1 Together moving Bokone Bophirima forward. PFMA

Presentation Outline Slide 2 Provincial Growth Actual Revenue Collection Actual expenditure per department and Economic Classification NW Compensation of Employees Analysis Goods and Services Conditional Grants Spending Infrastructure spending Bank balances and cash flow statements Accruals Unauthorised, Irregular, fruitless and wasteful expenditure Comparative Analysis of Co-management Departments Recommendations Slide 2 Together moving Bokone Bophirima forward. PFMA

Provincial Growth Slide 3 Together moving Bokone Bophirima forward. PFMA

Provincial Growth Slide 4 Together moving Bokone Bophirima forward. PFMA

Provincial Growth Slide 5 Slow Growth High rate of Unemployment Together moving Bokone Bophirima forward. PFMA

Provincial Growth Provincial & National Shares Slide 6 Together moving Bokone Bophirima forward. PFMA

sector performance for 2015 Slide 7 Together moving Bokone Bophirima forward. PFMA

Municipal District growth level: 2015 Slide 8 Together moving Bokone Bophirima forward. PFMA

Challenges Facing The Province Demand for minerals resources have decreased in recent years Slide 9 Together moving Bokone Bophirima forward. PFMA

Developmental Challenges 1996 2014 Population 2,928,877 3,670,889 More Youth HDI 0.53 0.58 Should be close to 1 Gini Coefficient 0.57 0.61 Should be below 0.5 Poverty 1,010,262 881,407 Eradicate No schooling* 287,337 256,675 Universal Acces to Education Matric only 225,131 680,928 Matric & Bachelors degree 18,455 64,207 Matric & Postgrad degree 6,051 29,099 Very Few with Higher Qualification *Education refers to people aged 20+ Slide 10 Together moving Bokone Bophirima forward. PFMA

Actual Revenue Collection – 31 March 2016 Slide 11 Together moving Bokone Bophirima forward. PFMA

Actual Revenue Collection – 31 March 2016 Slide 12 Together moving Bokone Bophirima forward. PFMA

Actual Revenue Collection – 31 March 2016 Slide 13 Together moving Bokone Bophirima forward. PFMA

Actual Revenue Collection – 31 March 2016 Slide 14 Together moving Bokone Bophirima forward. PFMA

Actual Revenue Collection – 31 March 2016 Economy and Enterprise Development The under collection is mainly on casino taxes, horse racing taxes and liquor licenses. Department of Community Safety and Transport Management Under collection is attributable to challenges in respect of the E-Natis contract with the service provider; Late payment of log sheets and non-payment of traffic fines; The department has registered a late recovery whereby the actual collection for March exceeds the projected collection after issues with the collecting municipalities were resolved. The March collection serves as a base for an optimistic outlook for the 2016/17 financial year. Slide 15 Together moving Bokone Bophirima forward. PFMA

Actual Revenue Collection – 31 March 2016 Department of Public Works & Roads Undercollection is attributed to the delay in transferring rental money by various departments; Delay in finalizing the process of disposing yellow fleet resulted in 90% of under collection from planned sales of capital assets; Continuous follow up will be made with the transferring departments, to ensure timeous revenue collection and accurate reporting. Slide 16 Together moving Bokone Bophirima forward. PFMA

Expenditure Per Department as at – 31 December 2015 Slide 17 Together moving Bokone Bophirima forward. PFMA

Expenditure as at 31 December 2015 Slide 18 Together moving Bokone Bophirima forward. PFMA

Expenditure as at 31 December 2015 Slide 19 Together moving Bokone Bophirima forward. PFMA

Expenditure as at 31 December 2015 The graph depicts efficiency of efforts to bring the expenditure on par with the quarterly norm. The expenditure has improved from two percentage points below the norm to one percentage point below. Slide 20 Together moving Bokone Bophirima forward. PFMA

Expenditure Per Department as at – 31 March 2016 Slide 21 Together moving Bokone Bophirima forward. PFMA

Expenditure as at – 31 March 2016 Underexpenditure has increased by 1.1 percentage points as compared to 2014/15. However, no department has overspent its 2015/16 allocation Slide 22 Together moving Bokone Bophirima forward. PFMA

Underspending as at 31 Mar ‘16 Slide 23 Together moving Bokone Bophirima forward. PFMA

Expenditure as at year end (Y-on-Y comparison) Slide 24 Together moving Bokone Bophirima forward. PFMA

Expenditure as at year end (Y-on-Y comparison) Slide 25 Together moving Bokone Bophirima forward. PFMA

Expenditure – as at 31 March 2016 Social Cluster Slide 26 Together moving Bokone Bophirima forward. PFMA

Education & Sports Dev Exp – as at 31 March 2016 Underspending of 3.3 percentage points is mainly attributed to CoE which has underspent by R242.69 million. Goods and Services has underspent by R111.66 million mainly on LTSM. Slide 27 Together moving Bokone Bophirima forward. PFMA

Health Exp– as at 31 March 2016 The spending is slightly below the 100 per cent mark by 1.71 percentage points. The underspending is mainly recorded under goods and services as well as Compensation of Employees. Slide 28 Together moving Bokone Bophirima forward. PFMA

Soc Dev Exp – as at 31 March 2016 The department’s underspending on CoE is attributable to nonpayment of PMDS for the SMS and MMS personnel, outstanding OSD payments as well as the salary grading for level 9 and 11. Furthermore, the department has had challenges in respect of making transfer payments as a result of non-compliance by beneficiaries. Slide 29 Together moving Bokone Bophirima forward. PFMA

Public Works & Roads Exp – as at 31 March 2016 Spending of 99.44 shows an improvement as compared to the 2014/15 financial year. Expenditure has been improved on the two key programmes i.e. Public Works and Transport infrastructure. Slide 30 Together moving Bokone Bophirima forward. PFMA

Office of the Premier Exp – as at 31 March 2016 The spending of 97.45 per cent is driven by MRRR Projects. Slide 31 Together moving Bokone Bophirima forward. PFMA

Provincial Legislature Exp – as at 31 March 2016 The 98.41 per cent expenditure is an aggregate of the R25 million underspent on goods and services and the overspending of R20.2 million on compensation of employees. The expenditure of R300.7 million reflects an improvement of R32.1 million compared to the 2014/15 expenditure of R281.2 million. Slide 32 Together moving Bokone Bophirima forward. PFMA

CATA Exp – as at 31 March 2016 Spending of 93.32 per cent is attributable to underspending on capital expenditure at 73.17 per cent. The department has cited late awarding of projects by DPWR, inaccurate reporting by the implementing agents, lack of urgency in addressing critical construction matters and Eskom connection delays. Slide 33 Together moving Bokone Bophirima forward. PFMA

CS&TM Exp – as at 31 March 2016 Low spending of 95.79 per cent is attributable to the capital equipment which was ordered but not yet delivered. A roll over of funds has been requested. Slide 34 Together moving Bokone Bophirima forward. PFMA

EED Exp – as at 31 March 2016 The department recorded an expenditure of R301.64 million or 97.27 percent and an underexpenditure of R8.46 million. Slide 35 Together moving Bokone Bophirima forward. PFMA

Finance Exp – as at 31 March 2016 The expenditure of R425.8 million or 99.72 per cent is registered with minimal underspending. Slide 36 Together moving Bokone Bophirima forward. PFMA

LG&HS Exp – as at 31 March 2016 The department expenditure is at 99.71 per cent or R2.6 billion. Development and Planning programme recorded an underspending of R7.56 million due to the roll over of funds with an amount of R17.7 million Slide 37 Together moving Bokone Bophirima forward. PFMA

Tourism Exp – as at 31 March 2016 Spending for the period ending 31st March 2016 accounts for 87.77 per cent which is far below the threshold. The gross underspending is attributable to nonpayment of PMDS for 2014/15 financial year as well as outstanding Invoices for the month of March due to financial year end closure. Slide 38 Together moving Bokone Bophirima forward. PFMA

READ Exp – as at 31 March 2016 The department recorded an expenditure of 99.56 per cent or R1.09 billion, which shows an improvement of 2.5 percentage points as compared to the 2014/15 financial year. The underspending is attributable to non-filling of vacant posts as well as transfers and subsidies in respect of Ilima/Letsema grant. Slide 39 Together moving Bokone Bophirima forward. PFMA

Expenditure Per Econ Class as at – 31 March 2016 Slide 40 Together moving Bokone Bophirima forward. PFMA

Expenditure – as at 31 March 2016 Slide 41 Together moving Bokone Bophirima forward. PFMA

NW Compensation of Employees Comparative Analysis of NW Compensation of Employees Slide 42 Together moving Bokone Bophirima forward. PFMA

COE Expenditure – as at 31 March 2016 Slide 43 Together moving Bokone Bophirima forward. PFMA

CoE Expenditure as at 31March 2016 ( Based on Main Budget) Slide 44 Together moving Bokone Bophirima forward. PFMA

CoE Expenditure as at 31 March 2016 ( 2nd Adjust. Budget) Slide 45 Together moving Bokone Bophirima forward. PFMA

% Share CoE Y-on-Y Comparison -0.51% The table above reflects the year-on-year comparison of CoE as a percentage of the total departmental budget. Although the rand value has increased from R18.3 billion in 2014/15 to R19.5 billion in 2015/16, the percentage share of CoE to the total budget, has reduced i.t.o percentage share. Slide 46 Together moving Bokone Bophirima forward. PFMA

CoE Budget % Share (Y-on-Y comparison) Slide 47 Together moving Bokone Bophirima forward. PFMA

% Growth: 2014/15 - 2015/16 Slide 48 Together moving Bokone Bophirima forward. PFMA

2015/16 In-Year Budget Growth Departmental Allocation vs CoE Growth The 2nd adjustment budget resulted in the percentage share of CoE from 58.11 per cent to 55.84 per cent. Most departments reflect a decline on CoE despite the overall budget increases. Slide 49 Together moving Bokone Bophirima forward. PFMA

CoE Percentage Growth Over The MTEF The red Shaded areas reflect a higher than ICS budget growth. The growth in 2016/17 is based on the Preliminary 2015/16 year-end expenditure. The higher than ICS growth makes provision for the existing staff and additional staff anticipated to be recruited in the respective years. Notably the percentage share of CoE to the 2016/17 budget is 58 per cent Slide 50 Together moving Bokone Bophirima forward. PFMA

% Share Exp. Per Sal Level Slide 51 Together moving Bokone Bophirima forward. PFMA

% Share Headcount Slide 52 The provincial labour force is mainly dominated by officials in salary level 6-8 Slide 52 Together moving Bokone Bophirima forward. PFMA

Monthly CoE Exp 2015/16 Slide 53 Together moving Bokone Bophirima forward. PFMA

Slide 54 Together moving Bokone Bophirima forward. PFMA

Slide 55 Together moving Bokone Bophirima forward. PFMA

Slide 56 Together moving Bokone Bophirima forward. PFMA

Slide 57 Together moving Bokone Bophirima forward. PFMA

Goods & Services, Conditional Grants and Infrastructure Comparative Analysis of Goods & Services, Conditional Grants and Infrastructure Slide 58 Together moving Bokone Bophirima forward. PFMA

Goods & Services Expenditure – as at 31 March 2016 Slide 59 Together moving Bokone Bophirima forward. PFMA

Goods & Services Expenditure – as at 31 March 2016 Slide 60 Together moving Bokone Bophirima forward. PFMA

Conditional Grants Spending – as at 31 March 2016 Slide 61 Together moving Bokone Bophirima forward. PFMA

HEALTH Conditional Grants Spending as at 31 March 2016 The slow spending on EPWP is as a result of short term contracts been awarded to EPWP workers; 87.2 per cent spending on NHIG is as a result of uniforms and health promotion materials amounting to R546.6 thousand that could not be paid as suppliers failed to deliver by March 2016. Slide 62 Together moving Bokone Bophirima forward. PFMA

CATA Conditional Grants Spending as at 31 March 2016 Actual spending of R127.40 million or 86.12 per cent R147.9 million is mainly due to the planned opening of libraries events that did not materialize as well as the non-finalization of promotional materials’ procurement. Slide 63 Together moving Bokone Bophirima forward. PFMA

CS &TM Conditional Grants Spending as at 31 March 2016 The slow spending on EPWP grant is driven by the delays in recruitment of beneficiaries that was made in February 2016; Slide 64 Together moving Bokone Bophirima forward. PFMA

ESD Conditional Grants Spending as at 31 March 2016 Math, Science & Technology grant is allocated R42.6 million and has the lowest spending of R32.2 million or 75.6 per cent. A rollover request of R10.3 million has been submitted in relation to ICT equipment's; Workshop equipment's; protective clothing as well as printing of Technical Science Textbooks Slide 65 Together moving Bokone Bophirima forward. PFMA

LG&HS Conditional Grants Spending as at 31 March 2016 The Human Settlement Development Grant recorded a 100 per cent expenditure even after the grant was augmented by R100 million during the second adjustment budget. The Extended Public Works Programme (EPWP) Integrated Grant for Provinces has spent 92.13 per cent or R3.69 million as a result of municipalities which did not replace beneficiaries whose contracts were terminated. Slide 66 Together moving Bokone Bophirima forward. PFMA

PW&R AND Soc Development Conditional Grants Spending as at 31 March 2016 DPWR: PRMG spending is at 99.95 per cent or R 787.7 million. SocDev: The EPWP integrated and Incentive grants the grant recorded spending of 90.2 per cent while the EPWP(Social Sector) grant only spent 42 per cent. Both grants underspent due to the late Appointment of EPWP beneficiaries.. Slide 67 Together moving Bokone Bophirima forward. PFMA

READ Conditional Grants Spending as at 31 March 2016 The gross under spending on Land Care is attributed to the delays in implementation of the programme. This is mainly as a result of challenges relating to the buy-in by beneficiaries; Slide 68 Together moving Bokone Bophirima forward. PFMA

Infrastructure Spending as at 31 March 2016 Slide 69 Together moving Bokone Bophirima forward. PFMA

Infrastructure Spending as at 31 March 2016 Slide 70 Together moving Bokone Bophirima forward. PFMA

Infrastructure Spending as at 31 March 2016(Excl. Con Grants) Slide 71 Together moving Bokone Bophirima forward. PFMA

BANK BALANCES AND CASH FLOW STATEMENTS Slide 72 Together moving Bokone Bophirima forward. PFMA

NW: Provincial Bank Balances Slide 73 Together moving Bokone Bophirima forward. PFMA

ACCRUALS Slide 74 Together moving Bokone Bophirima forward. PFMA

ACCRUALS Slide 75 Together moving Bokone Bophirima forward. PFMA

UNAUTHORISED, IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE Slide 76 Together moving Bokone Bophirima forward. PFMA

UNAUTHORISED EXPENDITURE Slide 77 Together moving Bokone Bophirima forward. PFMA

IRREGULAR EXPENDITURE Slide 78 Together moving Bokone Bophirima forward. PFMA

FRUITLESS AND WASTEFUL EXPENDITURE Slide 79 Together moving Bokone Bophirima forward. PFMA

REMEDIAL ACTIONS TO ADDRESS U.I.F All the irregular expenditure incurred were investigated; Request for condonement were made based upon investigation to the relevant authorities; Recommendation from the investigation is implemented in the departments; Following steps were taken to curb any future UIF recurring:   Checklists were introduced in the critical areas of the SCM to ensure that all the steps were followed before the procurement Reporting to the Provincial Treasury and follow ups are done on a regular basis Consequence management were introduced and also included in the Performance Agreement of the Accounting Officers Slide 80 Together moving Bokone Bophirima forward. PFMA

Recommendations It is recommended that the Select Committee notes:- The aggregate provincial spending of R34.14 billion as at the end of March 2016 which is skewed towards non-infrastructure and non- conditional grant spending; That the Provincial Treasury has issued a directive to minimize accruals and also enforce accountability with regards to accruals; Provincial Treasury will conduct Quarterly expenditure reviews with provincial departments to minimise poor budget planning and implementation that leads to a March spike; Stricter measures will be put in place to avoid under spending and non- spending of conditional grant and infrastructure allocations in 2016/17 financial year; Together moving Bokone Bophirima forward. Slide 81 PFMA

Recommendations It is recommended that the Select Committee notes:- The reduction on unauthorised expenditure resultant from the R829 million that was condoned during the financial year; The 50 per cent reduction on accruals as compared to the R1.4 billion that was registered at the end of 2014/15; Improvement on infrastructure spending as compared to 2014/15, from 85.9 per cent to 96.7 per cent in 2015/16; The improved conditional grant spending from the 94.9 per cent of 2014/15 to 97.87 per cent expenditure as at end of 2015/16; A decline on the CoE budget as a result of the flexible moratorium; Together moving Bokone Bophirima forward. Slide 82 PFMA

Thank you Slide 83 Together moving Bokone Bophirima forward. PFMA