1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON ECONOMIC DEVELOPMENT
PERFORMANCE OF THE
ECONOMIC DEVELOPMENT DEPARTMENT
3RD OCTOBER 2017
CAPE TOWN

2. PRESENTATION OUTLINE Introduction Legislative Mandate
Expenditure vs. Performance
Financial Management
Current Expenditure Trends
Payment of Service Providers
Accountability
Good HR Practices
Employment Equity
Professional Ethics
Transparency
Concluding Remarks 2

3. INTRODUCTION
The Portfolio Committee requested the PSC to brief the Committee on various matters relating to the annual report of the Economic Development Department. This would talk to the PSC’s analysis of the Department’s performance and also discuss issues related to human resource capacity.
Data used:
Annual reports for the 2013/14, 2014/15 and 2015/16 and 2016/17 financial years
Other data available, e.g. from PSC tools and research, National Treasury, Presidency (DPME), Vulindlela, DPSA, Auditor-General Reports.

4. LEGISLATIVE MANDATE OF THE PSC
The PSC derives its mandate from sections 195 and 196 of the Constitution, which vests it with the custodian oversight responsibilities for the performance of the Public Service.
In line with this mandate, the PSC monitors, evaluates and investigates the organization and administration and personnel practices of the public services and promotes the values and principles governing public administration contained in section 195 of the Constitution.
It may also issue directives regarding compliance with personnel procedures relating to recruitment, transfers, promotions and dismissals. 4

5. VALUES GOVERNING PUBLIC ADMINISTRATION
Section 195
Sets out the values and principles governing public administration
A high standard of professional ethics
Efficient, economic and effective use of resources
A development-orientated public administration
Provision of services in an impartial, fair and equitable way, without bias
Responding to people’s needs and encouraging the public to participate in policy-making
Accountable public administration
Fostering transparency
The cultivation of good human resource management and career-development practices
A representative public administration with employment and personnel management practices based on ability, objectivity, fairness and the need to redress the imbalances of the past 5

6. EXPENDITURE VS. PERFORMANCE Achievement of targets
Indicator: Planned outputs achieved vs budget spent (a)
There has been slight decline in the % spent from 2013/14 to 2016/17 but the Department is still within the 2% under-or overspending. The Department spent only 93% of its budget under Programme 2.
The Department has been consistent over the last three years in achieving 100% of its targets while also achieving a number of additional targets supporting its KPIs (32 during 2016/2017).
Financial year
% Spent
Achievement of targets
2013/14
100%
97.4%
2014/15
99.7%
2015/16
99.8%
2016/17
98.6%

7. EXPENDITURE VS. PERFORMANCE
Indicator: Expenditure vs performance per programme (2016/17 financial year) (b)
EDD Annual Report 2016/2017

8. CURRENT EXPENDITURE TRENDS
Indicator: 2017/18 Level of expenditure against norm (c)
The EDD’s overspending during the first 5 months of 2017/18 needs to be managed to ensure the Department stays within the 2% norm at the end of the financial year.
* Information obtained from the National Treasury Website.
National Treasury Website 8

9. Unqualified with findings
FINANCIAL MANAGEMENT
Indicator: Audit Outcomes (a)
Audit Findings
2013/14
2014/15
2015/16
2016/17
Audit Opinion
Unqualified with findings
Predetermined Objective
No findings
Findings
Compliance with Legislation
Repeat findings
In 2016/7 the AG found that -
Effective steps were not taken to prevent irregular expenditure;
Although the Department’s internal control environment has improved, the internal control environment within finance stayed the same as a result of review processes which could not detect some non-compliance with laws and regulations.
No material findings on the predetermined objectives of the 2 line function Programmes.
* PFMA Consolidated general report on the national and provincial audit outcomes
AG’s Report in the Departmental Annual Report 2014/15
AG’s Report in the Departmental Annual Report 2015/16
AG’s Report in the Annual Report 2016/17

10. PAYMENT OF SUPPLIERS
The EDD must also be fair towards its own service providers.
Indicator: Invoices over 30 calendar days that had not been paid
Section 38(1)(f) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) requires accounting officers of departments to settle all contractual obligations and pay all money owing, within the prescribed or agreed period.
Treasury Regulations prescribes the period as thirty (30) days from receipt of an invoice.
There is a worrisome increase in a number of invoices paid after 30 days during the first quarter of 2017/18.
Only 2 invoices were older than 30 days and not paid during the same period.
Years
Invoices paid after 30 days
Invoices older than 30 days not paid
R Value
No. of invoices
2015/16
R7 837 4 R0
2016/17 R 3
R5 220 2
2017/18 (1st Quarter)
R18 680 69
R971
This slide provides information regarding some the principles with the performance indicators used to measure compliance – not all principles and indicators are listed (limited to only 10 slides as per the request).

11. ACCOUNTABILITY
Indicator: Filing of Performance Agreements (PAs) of HoDs (a)
HoDs in the Public Service are required to enter into Performance Agreements (PAs) with their EAs. The PAs of HoDs must be filed with the DPME by June of each year. If accountability is to be practiced in the public service, EAs, HoDs and senior managers should visibly support performance management processes and ensure that these cascade down to other levels in the SMS.
The PSC noted the Department’s challenges to fill the post of HoD. It is not required from Acting HoDs to file the agreements.
Instability at top administrative level is likely to compromise service delivery due to loss of institutional memory and organisational knowledge.
2014/15
2015/16
2016/17
PA of DG not submitted

12. ACCOUNTABILITY
Indicator: Filing of Performance Agreements (PAs) of Employees on levels 13 to 16 as on 31 May 2016 (a)
The overall compliance rate for the signing of PAs in the EDD was 29 of 32 or 91%.
Salary level
Funded posts
SMS members
No of signed PAs
Signed PAs (% of SMS) DG 1 16 2 15 14 17 12 9 75 13 24 20
100
Total 46 32 29 91
Extracted from the EDD Annual Report (2016/17) . Pg. 87

13. GOOD HR PRACTICES Vacancy rate per Salary Level (SL)
The overall vacancy rate as at 31 March 2017 was 11%. The vacancy rate at supervisory and production levels came down but the rate at SMS level is still exceptionally high
Data from Annual Report 2016/2017 p 66 onwards

14. EMPLOYMENT EQUITY Indicator: Women employees at SMS level (a)
The Department has succeeded over the past 4 years to meet the target of 50% women at Senior Management level.
The percentage of female SMS members increased from 2012/13 to 2015/16 but declined from 51.6% during 2015/2016 to 50% in 2016/2017. However, the figures still confirm that the Department is complying with the Employment Equity target.
HR Overview from Vulindlela

15. EMPLOYMENT EQUITY Indicator: People with disabilities (b)
The percentage of People with Disabilities increased since 2013/14 from under the target of 2% but the Departments success in attracting more PwDs was noted to be at 2.54% in 2016/17.
HR Overview from Vulindlela

16. HUMAN RESOURCE: MPAT ND Economic Development 3 HR Mgt Average Scores
MPAT 1.4
MPAT 1.5
MPAT 1.6
Change from previous year
MPAT RSA Average
Deviation from RSA Average
3 HR Mgt Average Scores
2,0
2,5
0,0
2,6
-0,1
3.1.1 HR Planning
3,0
0,5
2,8
0,2
3.1.2 Org Design
2,3
3.1.3 HR Dev Plan
1,0
3,1
3.2.2r Recruit and reten
-0,5
-0,3
3.2.4 Mgt diversity
3.2.5 EH&W
-0,6
Deleg PSA
4,0 -
3.3.1 Level 1-12 PMDS
3.3.2 SMS PMDS (ex HODs)
-2,0
2,4
-0,4
3.4.2 Discipl cases
2,1

17. PROFESSIONAL ETHICS
Indicator: Financial Disclosure Framework (FDFs) (a)
All members of the SMS are required to disclose the particulars of all their registrable interests (e.g. companies and properties) to their respective EAs by 30 April each year. EAs are required to submit copies to the PSC by 31 May of each year.
The EDD has been consistent with complying with the filing of all (100%) SMS financial disclosure forms by the due date over the last 4 financial years.
2009/ Fact sheet on the Financial Disclosure Framework for the 2009/2010 Financial Year. November 2010
2010/ Fact Sheet on the Financial Disclosure Framework for the 2010/2011 financial year. May 2012
2011/ Fact Sheet on the Financial Disclosure Framework for the 2011/12 financial year. October 2012
2012/ Fact Sheet on the Financial Disclosure Framework for the 2012/13 financial year. July 2013
2013/ Fact Sheet on the Financial Disclosure Framework for the 2013/14financial year. (Preliminary report and therefore figures may change)

18. Number of actual & potential conflict of interest
CONFLICTS OF INTEREST
Indicator: Conflict of interest (c)
2013/14
2014/15
2015/16
Number of actual & potential conflict of interest
Action taken 9
None 10 5
The PSC found 9 conflict of interest cases of officials in 2013/4. This rose to 10 conflicts of interest in 2014/15 and then reduced to 5 in 2015/16. The reduction in conflicts of interest is a positive sign and a trend that should continue.
It is important that remedial action is taken against cases of potential and actual conflict of interests. Data for 2016/17 is presently not available.

19. PROFESSIONAL ETHICS
Indicator: National Anti-Corruption Hotline (NACH) (b)
The PSC manages the National Anti-Corruption Hotline (NACH). Cases received from the NACH are forwarded to national and provincial departments, in accordance with the agreed protocols, for investigation.
PSC referred 2 NACH cases to the department during 2016/2017 and closed 50%.
2015/16
2016/17
Cases referred*
% Feedback received*
% Cases closed*
% cases closed*
N/A 2 1 50

20. TRANSPARENCY
The Department’s Website is user friendly and most documents are easily accessible.
The PAIA manual is available (braille version on request).
Annual Reports are a key accountability mechanisms, but it only serves to promote transparency if it is comprehensive and easily accessible
The Department’s Annual Reports are easily accessible on its Website.

21. CONCLUDING REMARKS
The PSC has noted some of the EDD’s achievements such as the 100% attainment of targets in all programmes during 2016/17 financial year and the equity targets.
However, the PSC is concerned about the following:
The department should ensure that an HOD is appointed and Performance Agreements of the HoD and Deputy Directors- General are in place.
The 2017/18 spending pattern should be contained within the norm.
The recent finding on payment of suppliers by the department requires attention.
There is a need to address cases on potential and actual conflict of interests.

22. Thank you Siyabulela PSC Website: www.psc.gov.za
National Anti-Corruption Hotline for the Public Service:
National Anti-Corruption Hotline for the Public Service: