The Eastern Cape Legislature in Bhisho on Tuesday went into lockdown, and the MEC for Finance, Economic Development and Tourism’s annual budget speech was moved to the International Conference Centre in East London.
Mlungisi Mvoko, the Eastern Cape MEC for Finance, Economic Development and Tourism, during his budget speech on Tuesday, announced a new strategy to strengthen food security in the province.
Mvoko said fresh food for school nutrition, patients in public hospitals and emergency relief food parcels would now be homegrown and procured within the province.
“This programme is geared towards procurement of agricultural food products from local farmers and aggregators, leveraging on the needs for school nutrition, patient food, and food parcels.
“The programme encompasses strategies for procuring such products within the province. This programme will be implemented in the new financial year, and its successful implementation will go a long way in addressing the challenge of food security and job creation.”
He said this would mean billions of rands were geared to the local agriculture industry over the medium term.
“These are our efforts to achieve food security using our own resources. We no longer want to see our funds being mainly spent on general retail with not much trace in the province in terms of economic benefit.
“We want to build a value chain whereby the primary production from the province is converted into secondary production and to the market. This will ensure that local farmers are ignited once the demand has been determined and thus improves employment opportunities. Any positive move towards food security is a story of good progress,” Mvoko said.
Legislature gates locked
The Democratic Alliance’s chief whip in the province, Bobby Stevenson, said there was an agreement that the budget would be presented at a hybrid sitting where members could either attend online or in person.
But on Tuesday morning the gates of the legislature were locked after a letter described “security concerns” relating to the ongoing Nehawu strike in the province.
“This is an assault on democracy. Never before in the history of the legislature have members been barred from the House. The legislature cannot be held to ransom by perceived threats that make a mockery of our constitutional democracy,” Stevenson said.
“Having caved in once, where will this end? A culture of lawlessness cannot determine when or where parliamentary sittings take place. The presiding officers need to come clean with the legislature and provide evidence for this drastic action, and inform us what disciplinary action will be taken against those who caused the shutdown of the legislature.”
Mvoko said in his speech that the largest challenges that need addressing in the province were youth unemployment, infrastructure development and the low performance of sectors with great potential to be springboards of recovery and growth.
The province’s growth was expected to be 1.2% over the medium term, but Mvoko said it should be at 5% for any meaningful impact. Unemployment in the Eastern Cape is at 42.4%.
He said that for the 2023/24 financial year, the province’s total fiscal envelope was R89.6-billion, made up of provincial equitable share allocations of R73.2-billion, conditional grants of R14.6-billion and R1.6-billion generated by the provincial government. The Eastern Cape has a budget deficit of R2-billion.
“We have then added R2.7-billion from the provincial reserves to cushion the deficit. This, however, will pose a liquidity risk in future, if we do not improve on provincial revenue collection to support our fiscal deficits,” said Mvoko.
He said the Eastern Cape Economic Development Fund had now been established and would be rolled out in the medium term, and the Eastern Cape Development Corporation would be the implementing agent for this fund.
“It will address funding gaps in the province, especially in high-potential growth sectors,” said Mvoko.
“Unlike other funding instruments, this fund will focus on loans and/or blended finance for commercially grounded enterprising ventures, particularly by small and medium enterprises and the informal business sector.
“This fund will also focus on seed funding and partnership development with the private sector with the aim of matching rand-on-rand funding, linked to resource-leveraging relating to identified Eastern Cape priority sectors and catalytic economic development projects.
“An amount of R100-million has been allocated to kick-start this programme during the first year of its implementation, the 2023/24 financial year. We are making a clarion call to the private sector, including the banking sector, to join hands with the government in making this initiative a success.”
Water challenges
He announced an allocation of R1.8-billion to the Coega Development Corporation to replace the bulk water and sewer system in the Nelson Mandela Metro, the province’s biggest metro. The executive mayor of this metro, Retief Odendaal, has on several occasions warned that the sewerage system in the metro was close to collapse.
“This will save the residents of the metro from the water challenges that they are experiencing currently. This will also ensure that there is adequate water provision and sewer control in the area to retain and attract investment,” said Mvoko.
“High incidents of cable theft, railway destruction, vandalism of public infrastructure such as schools and hospitals are a huge fiscal and developmental risk in the country and the province. More collaborative efforts between state institutions and civil society must be realised [to fight this].
“To circumvent all these risks and inefficiencies, we encourage good governance and transparency, and projects must be completed on time and within budgets, if we are to realise value.”
Education outcomes
He allocated R41.1-billion to the Department of Basic Education to improve provincial education outcomes, including the appointment of school-based educators for critical subjects, post substitutes, special intervention, curriculum and growth. R2.5-billion had been made available over the 2023 medium-term expenditure framework for the annual procurement of textbooks and stationery for all learners in grades R to 12.
R2.5-billion was allocated to “address budget pressures in compensation of employees”. Provision was also made for cost-of-living increases for employees.
To deal with school infrastructure backlogs, the department allocated R1-billion of the total budget of R2-billion for the School Infrastructure Backlogs Grant, which is an indirect grant managed by the National Department of Basic Education.
Visit Daily Maverick's home page for more news, analysis and investigations
Department of Health
The Department of Health was allocated R28.1-billion. An additional amount of R967.7-million in the 2023/24 financial year and R3-billion over the 2023/24 medium term was allocated for the compensation of employees and service backlogs, including antiretroviral therapy, TB, medicine and other goods and services.
Some of these funds would be ring-fenced to deal with medico-legal claims, said Mvoko, referring to a ruling by the Mthatha High Court that the state should by law be allowed to offer medical services to patients harmed by negligence, under certain conditions. This would replace payouts running into millions of rands that make up the bulk of medico-legal claims.
Mvoko said they were making progress in their turnaround strategy at the Department of Health.
“At the core of these challenges are the medico-legal claims that are draining provincial coffers, leaving the department with serious cash flow challenges.
“The multipronged strategy’s main purpose is to steer provincial health services into becoming more comprehensive and balanced in responding to individual patient, family, and community health needs.
“It is looking at improving efficiencies across the system focusing on these pillars:
- Optimisation of the budget;
- Increase income streams;
- Decrease losses and manage risk;
- Digitalisation; and
- Efficiency and cost-saving.
“These measures, in a nutshell, seek to address the department’s cost of employment, their infrastructure and their supply chain processes. They also seek to decrease clinical risks, deal with fraud and corruption, digitalisation of systems and widen their revenue sources.”
Mvoko said that in some early successes of this strategy, the provincial government had curtailed the bleeding of funds from the health budget through upfront and lump sum medico-legal settlements.
Other successes include a 96% reduction in in-year irregular expenditure to under R3.4-million in 2022/23 from R104-million in 2021/22 due to improvements in supply chain management systems and controls.
“The provincial health department has reprioritised its budget and made available R544-million over the medium term towards maintenance and acquiring much-needed health machinery and equipment.”
Social development
The Department of Social Development was allocated R2.8-billion, with R15.7-million set aside for the “roll-out of social behavioural change programmes to assist with crime prevention,” Mvoko said. “These programmes seek to address risky and harmful social behaviours.”
He said concerted efforts must be made to save the province’s crisis-riddled municipalities.
“One of our major challenges is having the majority of our municipalities in financial distress, which affects their financial sustainability. Causes for this are poor revenue collection and poor implementation of cost containment measures.
“Our poor performance in infrastructure delivery is largely seen at municipalities, against high levels of service delivery backlogs. We continue to underspend on infrastructure grants whilst our roads are dilapidating, provision of electricity is in crisis mode and water and sanitation challenges are at our doorstep.
“As a result, the province continues to lose conditional grant funding due to this underspending and funds returned to the National Revenue Fund. The provincial government will, however, enhance measures to assist municipalities to improve the situation through the risk-adjusted strategy. We will work with them to identify additional revenue streams to improve revenue collection.”
Mvoko said the consolidated debt owed to municipalities by the state, residents, and businesses as of 31 December 2022 was R32.1-billion, with households accounting for R23.8-billion, businesses for R6.4-billion and organs of state for R1.5-billion. DM/MC