‘Spending exceeds revenue,’ says Eastern Cape MEC as conditional grants slashed

Eastern Cape MEC for Finance Mlungisi Mvoko called for zero tolerance for financial mismanagement and underspending as he presented a tight medium-term budget for the province on Thursday.

Mvoko said the province’s economy had shown clear signs of resilience in the face of dire conditions caused by SA’s logistics and electricity crises, the impact of natural disasters and a poor global outlook.

He said if the national government solved the problems at Transnet and the electricity crisis, the Eastern Cape economy would grow faster.

The agricultural and manufacturing sectors in the province had shown growth, but unemployment was still at 38% and the fiscal outlook, Mvoko said, remained constrained.

“Spending exceeds revenue,” he said, but pointed out that the province had received some funding to absorb increases for public servants that were agreed upon earlier this year. But at the same time, it had lost millions in conditional grants. 

Read more in Daily Maverick: Service delivery collapse: ‘Gatvol’ Eastern Cape resident reports provincial-wide failures

The budget comes under further pressure in the face of a series of court orders for political and department heads to report back on progress made in providing education infrastructure, service delivery and addressing hunger in the province.

Read more in Daily Maverick: Children are dying of hunger in the Eastern Cape – declare a disaster, urges Human Rights Commission

Mvoko said the Eastern Cape was in a prime position to provide renewable energy to the country and had built up significant capacity in wind farms. 

But, he warned, there was no room for the province to lose money due to underspending.

Read more in Daily Maverick: Eastern Cape warns of drastic budget-slashing to meet national government targets

He called on the political heads of departments to show “zero tolerance” for managers who failed to comply with financial rules. 

Mvoko said he was worried that some municipalities that had received millions in disaster funding would not spend the funds in time. 

The Democratic Alliance chief whip in the legislature, Bobby Stevenson, said the adjustments budget had seen the vast majority of funds allocated for salaries. 

“Social development, for example, was awarded R25-million for salaries but nothing more to feed hungry children.

“When one looks at the cuts to conditional grants, of R761-million, one sees that R133-million was cut from health, R247-million from education, of which R228-million was cut from the school infrastructure grant, and R70-million from road maintenance. The biggest cut was R256-million from the Department of Human Settlements.” 

“Despite these significant cuts, MEC Mvoko has failed to spell out any long-term plans to address the elephant in the room, the runaway cost of employment in the public sector, which is currently at around 66%.

“This has been partly driven by the cadre deployment of incompetent millionaire managers rather than focusing on filling critical vacancies on the frontlines of service delivery.

“The Harvard report on Growth Through Inclusion says that if South Africa is to return to growth, it must arrest the collapse of state capacity. The lack of state capacity in the Eastern Cape impacts economic growth, and without economic growth, we will never be able to bring down the unemployment rate, which is the highest in the country,” Stevenson said. DM