NORTH WEST PROVINCE PRESENTATION ON EARLY CHILDHOOD DEVELOPMENT CONDITIONAL GRANT 16 MAY 2018

BASELINE: EQUITABLE SHARE ALLOCATION IN 2017/18 R52,6m was allocated for subsidies to Non-Profit Organizations running Early Childhood Development(ECD) programmes Expenditure at year-end was R46m (88%) 291 ECD centres were funded 15 145 Children were subsidized Expenditure was low compared to previous years because the strike action which started in January 2018 had a negative impact on payment of subsidies during the 4th Quarter.

ECD CONDITIONAL GRANT OBJECTIVES To increase access of children from low income households to early childhood development services. The target for 2017/18 was 6 632 children. To improve the infrastructure of 45 conditionally registered ECD centres providing an early childhood development programmes in order to assist them to attain full registration

GRANT ALLOCATION FOR 2017/18 GRANT STRUCTURE AMOUNT ECD CENTRE MAINTENANCE R4 465 940 ECD SUBSIDY EXPANSION R26 258 900 ADMINISTRATION R 1 961 160 TOTAL R 32 686 000

ECD CENTRE MAINTENANCE - APPROACH 1st Quarter 48 ECD centres were assessed for infrastructure maintenance in deep rural villages and townships in March 2017. Priority was given to provision of water and sanitation. The unit cost in the quotations received far exceeded the R100 000 threshold per centre. The list was abandoned as the projects were not affordable. 2nd Quarter A new list of 45 ECDs which required minor maintenance was assessed and confirmed. SCM processes were completed in respect of 11 centres and maintenance work commenced.

ECD CENTRE MAINTENANCE - APPROACH 3rd Quarter 9 ECD Centres were completed. SCM processes (briefing sessions) were not properly coordinated which led to non-compliant quotations. The process had to be redone and there was loss of time. 4th Quarter 2 ECD Centres were completed and service providers were paid. SCM processes were completed in respect of 11 additional centres. 3 Centres out of the 11 were completed and pre-payment inspections will be finalized Friday 18 May 2018. Service providers for the remaining 8 centres are in receipt of purchase orders. An application has been submitted for a roll over in respect of the 11 projects.

ECD CENTRE MAINTENANCE – 2017/18 PERFORMANCE Allocation received in 2017 R4 465 940 Number of centres Targeted 45 Expenditure as at 31st March 2018 R1 055 537 Number of centres completed as at 31st March 2018 and paid 11 Commitments: Purchase Orders issued to service providers Application for a Roll over R1 033 901 Number of ECDs not reached 23 Underspent R2 376 502

SUBSIDY GRANT: 2017/18 PERFORMANCE Allocation: R26 258 900 Expenditure as at 31st March 2018: R18 047 920 (68.7%) Underspent: R8 210 980 An application has been made for a roll-over in order to pay the March subsidy claims amounting to R8,2m as payments are made retrospectively. 178 centres were reached against a target of 155 4 490 children were subsidized against a target of 6 632

SUBSIDY GRANT - APPROACH 1st Quarter 155 ECDs assessed Provincial Business Plan approved by National DSD 2nd Quarter Expenditure amounting to R5 432 885 incurred. Claims were calculated for 248 days per annum instead of 264 days per annum in order to avoid complaints of unequal treatment from the ECD sector. Service Level Agreements were amended to reflect monthly instead of quarterly payments and also to avoid payment before service is rendered.

SUBSIDY GRANT - APPROACH 3rd Quarter Expenditure amounting to R8 523 447 incurred. Incorrect classification of expenditure was corrected through journals. A saving of R1 709 100 was realized because claims were calculated for 248 days per annum instead of 264 days. 4th Quarter Expenditure amounting to R4 091 588 incurred. The saving increased number of centres benefiting from 147 to 178

ADMINISTRATION Allocation: R1 961 160 Expenditure as at 31st March 2018: R1 196 798 The under expenditure of R 764 362 was due to the Project Team which was appointed in the third quarter - 1 x Project Manager : Infrastructure maintenance 1 x Project Manager : Programme subsidy management 1 x Admin support

GRANT EXPENDITURE AS AT 31ST MARCH 2018 Grant Structure Budget R’000 Expenditure As At 31st March 2018 Balance % Expenditure performance ECD Centre Maintenance 4 465 1 055 3 410 24% ECD Subsidy Expansion 26 258 18 047 8 210 69% Administration 1 961 1 196 764 61% TOTAL 32 686 20 300 12 385 62%

Lessons learned Improvement Plan ECD MAINTENANCE GRANT ECDs in deep rural areas where there is no water reticulation and sanitation require more funds Select minor maintenance projects (Category A) during 2018/19 in order to comply with the conditions of the grant Include category B in the business plan for 2019/20 financial year. Some service providers charge government exorbitant amounts Assess the market price in order to estimate the cost for prioritized centres. Negotiate reasonable prices with service providers Delayed SCM processes lead to under-spending and poor performance Finalize SCM processes by end of June 2018 Develop database of eligible service providers for 2019/20 during 2018/19. Provision of budget for ECD Maintenance from Goods and Services to Transfer Payments during 2019/20 Transfer funds to conditionally registered ECDs during 2019/2020. Intensify monitoring and support for funded Organizations

Uniformity / equal treatment is important for the sector ECD SUBSIDY GRANT Lessons learned Improvement Plan Uniformity / equal treatment is important for the sector Align the equitable share subsidies framework to the conditional grant framework (264 days for all ECD centres) ADMINISTRATION Lessons learned Improvement Plan Adequate human resources are required for successful project management Appointment of 2 Works Inspectors by end of July 2018

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