1. Annual Budget for 2016/2017 Financial Year
A presentation to the Select Committee for Cooperative Governance and Traditional Affairs The Parliament of the Republic of South Africa
Annual Budget for 2016/2017 Financial Year
The presentation provides summaries of financial management matters and results that were subjected to oversight by the Finance Committee and Audit Committee.

2. Table of Contents Introduction and Purpose of the presentation
The Legislative framework
The fiscal environment, principles and planning assumptions
The 2016/17 proposed budget
Risk Management

3. Purpose of the Presentation
This presentation seeks to outline;
the CGE budget for the ensuing financial year (2016/2017)
Draw a link to the APP and other operating activities planned for the same period;
Highlight challenges, threats and opportunities and other matters related to the management and control in execution of the plan
Recommendations for the appropriation of funds in line with the proposed Annual Performance Plans for 2016/2017

4. Legislative Framework
Chapter 13 of the Constitution of South Africa, Act 108 of 1996 and the Public Finance Management Act of 1999 (as amended) advances for values which espouses openness and accountability in the allocation and use of state resources.
Under Chapter 1 of the PFMA (The Act) the values are bolstered further by provisions stating that the object of the Act is to secure transparency, accountability and sound management of the resources
The Framework for strategic planning and Annual Performance plans of propagates that operational budgets must be linked to the institutions strategic objectives and their respective legislated mandates
Section 38 of the PFMA and related Treasury regulations promotes the integration of Risk Management practices into strategic planning and financial controls

5. NT - Framework for strategic planning

6. The Fiscal environment
At the back of the general macro economic conditions and the fiscal space, funds allocations through the standard MTEF processes were restricted to the MTSF priority areas.
Budgetary reductions of 2014 negatively impacted the baseline allocation – A R3,1 m direct abatement in 2015/2016 period, rendering a nominal increase of R2,7 m for 2016/2017 inconsequential in real terms when the effect of inflation is factored
A final allocation letter by National Treasury made available R69, 9 m available for programme spending during 2016/2017 – post MTEF, MTEC and ENE processes

7. Planning principles and assumptions
General price changes at an annualised rate of 5.9%
Cost of living adjustment for remuneration of staff and Commissioners estimated at an average of 6% p.a. for the 2016/2017 – This will inevitably absorb the additional allocation ( 6% of current COE baseline of R47m)
Previous moratorium to fill unfunded positions in the establishment retained/upheld, noting the unchanging operating and funding circumstances
To an extent possible, “zero basis” budgeting was followed, consultative approach taken where appropriate albeit with limit
Rigidities present given the nature and structure of the CGE funding model v operating model – Most of cost components are structurally fixed ( Office overheads and establishment constituting over 80% of the annual budget). This leaves little space for planning of direct APP activities

8. Medium Term Expenditure Framework (MTEF) Perspective
Audited Outcome
Revised estimate
Medium-term estimate
R thousand
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
Administration
23 312
27 313
30 214
30 511
31 946
33 825
35 517
Creation of enabling gender equity legislation
12 852
12 634
15 811
18 493
19 752
20 502
21 527
Protection and promotion of gender rights
8 450
11 266
8 991
10 293
10 777
11 411
11 982
Monitoring and compliance to treaties
6 095
7 079
6 936
7 938
8 311
8 800
9 240
Total expense
50 709
58 292
61 952
67 235
70 786
74 539
78 266
adjusted by - Extra budgetary sources: savings, donations and reductions
4 441
781
1 128
2 665
-3 098
-4 648
Allocation from National Treasury
55 150
59 073
63 080
69 900
67 688
69 891
Annual growth in available funding 7%
11%
-3% 3%
12%

9. The nature and structure of the CGE budget
The budget of the Commission forms the main division of Vote 13 for the Ministry for women in the Presidency
Three 3 programmes constitute the budget, namely;
Commissioners Governance & Support,
Corporate/Administration Support
Main Service/Core
The top spending drivers are:
Compensation of Employees 73% ( We are a service driven and therefore & human resources intensive)
Professional Services 7% ( Litigations, audit fees, etc)
General Office overhead expenses takes up about 20% of the allocation, notably with contributions from Travel & Accommodation at 6% (outreach & visibility are at the core our strategy) and Telecommunications, Courier Services and vehicles expenses – 6% (Offices country-wide)
Furthermore over 90% of the total spending is made out of unavoidable expenditure in the main of which majority is fixed (COE for e.g.) -Less flexibility

10. 2016/2017 Total budget estimates

11. 2016/2017 Total budget estimates
Most costs are fixed – over 80%
APP (mandate) a residue and inconsequential ; limiting effectiveness in execution of the long term strategy

12. 2016/2017 Funded establishment
+ a legal intern

13. 2016/2017 budget estimates

14. These activities are included in the APP of 2016/2017, however, are not funded by the 2016/2017 allocation from Treasury
2016/2017 extra budgetary funded items
Project
Extra budgetary source
Training Manual and related train the trainer programme
Retained surplus as granted by NT
20 Years review of the CGE
Smart partnering + retained surplus
VOIP solution implementation
Self funding from projected savings on telephone expenses
Media partnerships
MoU with Partners - ongoing

15. Planned activities driven by internal resources, including Commissioners in the execution of public hearings amongst others
The SO was allocated 17% of the overall budget at R11,5 m of which COE is the key contributor
Other direct costs for goods & services contained through planned alternative(innovative) approach such as use of technology where relevant

16. The SO budget represents 33% of the annual allocation.
Key drivers of activities are internal staff hence the COE constitutes a larger share of the SO budget
The SO is activity intensive and includes direct interaction with target audience ranging from grass-roots to institutionalised stakeholders
Most of the SO activities will be executed through smart-partnering with key stakeholders, achieving dynamic and cost effective realisation of goals

18. 43% of the overall annual allocation will be spent on the SO
Travel & accommodation gto cater for critical meetings by Commissioners and officials, ranging from Plenary, site administrative visits, parliament and for other oversight stakeholders
Professional services includes Audit fees (R2,3m), HR services (IR/DC, Employee Wellness, recruitment adverts), Strategic planning, Radio campaigns, Audit Committee members fees, etc

19. Calling upon the identification of threats and opportunities
Risk Management
Calling upon the identification of threats and opportunities
The only alternative to risk management is crisis management --- and crisis management is much more expensive, time consuming and embarrassing.
JAMES LAM, Enterprise Risk Management, Wiley Finance © 2003
Without good risk management practices, government cannot manage its resources effectively. Risk management means more than preparing for the worst; it also means taking advantage of opportunities to improve services or lower costs.
Sheila Fraser, Auditor General of Canada

24. Challenges and Opportunities
Funding inadequacy
Lesser scope for the APP activities
Capital Expenditure never funded except from once-off grant by NT
Baseline erosion over the years as the average increase was at a nominal 6%, and below the effective inflation rate of the CGE cost drivers
Increased Mandate and Demand for Services
Cost Containment implemented already bearing fruit
Partnership and Collaboration strategies
Technology platforms to extend reach and build efficiencies following the upgrade of IT infrastructure

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