PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY

1. PRESENTATION TO NCOPBY THE MEC LIMPOPO PROVINCIAL TREASURY ____________________________________________________________ 16TH JANUARY 2006

3. EDUCATION • HIV/AIDS • The commitment is R10,117m which will increase expenditure to R16,554m at the end of the financial year. • Redesigning of the HIV/Aids Conditional Grant is being proposed in order to enhance impact. • Primary School Nutrition Programme • This grant feeds about 1 400 000 school children. The Department projects full utilisation of the grant by the end of the financial year.

4. Conditional Grants Actual expenditure as at 31 December 2005 of the financial year 2005 / 06

5. Conditional Grants Actual expenditure as at 31 December 2005

6. Conditional Grants Expenditure 2005 / 06 • The department has managed to increase the expenditure per quarter as follows: • 6.27% = R40.67m in the first quarter • 22.1% = R 106.391m in the second quarter • 43.5 % = R 241 860 in the third quarter • The inability of the department to secure Tenders for the purchase of Medical Equipment has resulted in limited expenditure to date on the following grants: • Hospital Management and Quality Improvement at 37.26%, • National Tertiary Services at 28.76% • The tenders for Medical Equipment was finalised in November and expenditure is expected to substantially increase in the last quarter as the business plans include the assets required. • Equipment has been ordered and deliveries are awaited

7. Conditional Grants Expenditure - HIV & AIDS • The business plans for HIV & AIDS was adjusted in an attempt to ensure that service delivery is speeded up, the revised plans were forwarded to National Health in November 2005. • Some R20 million was transferred to NGO’s during October 2005, after proper screening the NGO’s ability to deliver on the part of the Comprehensive HIV&AIDS programme that they are expected to deliver service on. • Personnel Expenditure is not expected to increase as health professional posts catered for are not being filled as anticipated = under spending of R 11 m or 8.2 %. • Expenditure increased from 7.7 % in Sept. to 45.3 % in Dec 2005 • The expenditure should be increased once a system to account for medicines and tests used on HIV&AIDS related treatments in the hospitals is agreed upon. • Identifying the medicines used for the treatment of Aids Patients remains to be a challenge as all medicines are procured at a central point on the equitable share and have to be journalised to capture the expenditure under the Conditional Grant.

8. Conditional Grants Expenditure and interventions - I N P • The participation on the National Tender RT 289 has not been available to the department. • R 2 m for food supplements committed in November, purchased via quotations. • R 1.5 m for equipment already delivered, invoices awaited. • An additional R 2 m for equipment has been ordered. • Future participation on RT 289 is being negotiated to streamline procurement. • Vitamin A supplements (tablets) is being procured via the Pharmacy Depot to comply to contract requirements including the Bar Coding, to the value of R 700 000 to year end.

9. Conditional Grants Expenditure and interventions - I N P cont. • The use of multi vitamins was also slowed down due to contract requirements, R 1.5 m yet to be procured. • Skills development for food service management personnel to take place in February 2006 for R 2 m and the programme will continue into the next financial year. • Backlog of R 600 000 in Greenery projects in Bohlabela district due to un-availability of the system. • R 3 m yet to be spent by year end on all Greenery projects. HPTD Grant Expenditure on the HPTD Grant has been above the average and no problems is foreseen in spending the funds on service delivery in this regard, as equipment tenders are now in place.

10. Conditional Grants Expenditure and interventions HMQI • The training of management is ongoing but availability of management for training over extended periods are restrictive. • Personnel costs are below norm due to vacant posts. • The purchase of equipment R 2.8 m has not taken place- • Computers • Filling systems - Delay in the implementation of the Information and Records Management tender • Lack of equipment tender for medical equipment that was only finalized in December

11. Conditional Grants Expenditure - NTSG • Purchase of equipment has been delayed due to the unavailability of a tender that is now being finalised, has resulted in low expenditure patterns but an amount of R 32 m has since been committed. • It is envisaged that the full budget for Equipment of R 46 m will be utilised • Personnel costs for Specialists employed on the equitable share has been identified to be funded from this grant for the first three years of their employment and the Grant does carry these costs. Expenditure - Cholera / Malaria The full amount of R 2.718 m received as a roll over will be spent during the year on- • Pesticides for Malaria control • Vehicles for Vector control have been ordered • In response to the recent instances of reported Malaria cases R1.26m has been committed against the grant.

12. Conditional Grants Expenditure Hospital Revitalisation • The department surrendered R10 m to National Health with a request to increase the allocation for the 2006/07 year with the same amount due to the projects being completed in the following financial year. • This grant is fully committed but expenditure is dependant on the progress made by contractors. • The capacity of emerging contractors together with the availability of building materials especially Building Bricks has been a constraint that impacts on the timeous completion of the current contracts • Upgrading of the filing system at Revitalised Hospitals to the value of R 4.6 m has been ordered.

13. Local Government Housing Subsidy • Shortage of clay bricks in the province, difficulties experienced by contractors in raising funding for the acquisition of materials for construction and delays in implementing contracts by developers contributed to the low levels of spending on the Housing Subsidy. • Spending improved gradually and total spending is projected at R417.29 million which is 91.32%. • 3 880 houses will be completed as at the 31 March 2006.

14. Local Government (Con’t) Human Settlement and Redevelopment Programme • The overspending is as a result of the expenditure on projects whose budgets were rolled over from 2004/05 to 2005/06

15. Social Development HIV/AIDS • The expenditure is high because the Department has already transferred funds to 64 NGO’s for the smooth running of the programme. The transfers are in line with the Department’s planning. Social Assistance Admin Grant • The underspending is as a result of the delay in filling of posts identified as critical, and also on goods and services as a result of shared items, e.g. Stationery, telephone, water and electricity. South African Social Security Agency is currently housed within the Department of Health and Social Development.

16. Social Development Social Assistance Transfers Grant • A growth of 2% is projected and the actual growth in our province is about 2.6%. Integrated Social Dev Grant • There is no actual expenditure to date due to the delay of business plan approval. The delay was caused by the change of the conditions of the grant by National Department and identification of the projects to be funded. The business plan has now been approved and the expenditure will start to reflect in the third quarter.

17. Sports, Arts and Culture Mass Sport and Recreation Programme • The underspending on the grant is due to the fact that new hubs were supposed to have been launched during November, but was postponed to February 2006. Grant will be fully utilised.

18. Agriculture Comprehensive Agricultural Support Programme (CASP) • The underspending is due to limited capacity for infrastructure development and project registration in districts. There are numerous small projects that makes it difficult to manage. Land Care Programme Grant • The underspending is due to the delay in supply of fencing materials by suppliers. Orders were issued but payments could not be processed due to non delivery.

19. Provincial Infrastructure Grant

20. PIG…

21. Reasons for underspending (PIG) • Total: Total spending on the grant is at 40.2% is projected to be at 98% by yearend. • Education • Spending on the grant is at 44% of the grant. • It is expected the department will end the year at 100% of its budget (including commitments at yearend). • The low expenditure to the end of September is due to projects starting late (the departmental business plan was changed due a review of priorities, i.e. focus areas). • Roads & Transport • 41.2% has been spent so far. Most of the big contracts were awarded in September, spending is low as a result. (Spending has been picking up since September which stood at 14.8%). • The department projects to spend all its budget.

22. Reasons cont… • Health & Social Development • 26.2% of the grant has been spent so far. Spending on projects is dependant on stages of completion of the projects and most of these started late. There were other project –related problems such as: • 1. The late Appointments of Main & Sub Contractors. • 2. Project delays by the Implementing Agent, i.e. project implementation taking more time than it should. • 3. Poor performance by the main Contractors. • The department projects an underspending of 10% of its budget (R9.0M). • Agriculture • The department has spent 40.2% of the grant and this is due to the review of the small-holder irrigation schemes that were targeted to benefit from the grant (during the review process, these projects were put on hold). • With regard to fencing projects, supplier capacity for the poles to be used for fencing was overstretched, with the major suppliers being affected, leading to further delays in project starting times. • The department will underspend its budget by 15% (R5.9M).

23. Intervention strategies (PIG) • Health & Social Dev. • The department has adopted a proactive approach in project management, e.g. the project documentation stages are started earlier in order to pre-empt delays in tendering, etc. • Most of the grant is used for clinic projects (33 projects, most of these have just started and some will start in Feb – ave. cost per clinic R3M). • The department is unlikely to spend its full PIG budget in this financial year and could end the year at around 90% of its budget.

24. Intervention strategies… • Education • The department is identifying projects for fasttracking and this will boost expenditure (almost all the budget is already committed). • (NOTE: There could be some amounts that are not PAID but committed by yearend).

25. Cont… • Agriculture • The departmentis unlikely to spend its full PIG budget and will end the year at around 85% of the budget (underspending of R5.9M). • Roads & Transport • Engineers from the Roads Agency are currently assessing the projects in the province and identifying fast-moving projects and reallocating funds to these in order to eliminate the risk of underspending.

26. Total Infrastructure Budget

27. Total Nov YTD Spending

28. Total Spending…cont

29. Total budget – reasons for underspending • Total: Total capital spending (incl. PIG) is at 34.3% and is projected to be at 96% by yearend). • Roads & Transport • Most of the big contracts were awarded in September. • Education • Projects started late due to a review in priorities (which impacted on the business plan, i.e. it was changed).

30. Agric…reasons • Lack of skills to undertake technical infrastructure planning functions, e.g. the inability to compile the bills of quantities required for the projects. • Progress on projects has been delayed by the demand planning processes whereby a certain level of technical expertise, e.g. engineering is inadequate to expedite most projects. • With regard to fencing projects, supplier capacity for the poles to be used for fencing was overstretched, with the major suppliers being affected, leading to further delays in project starting times.

31. Agric..reasons • The decentralization process of both the planning and financial processes of several programs to the Districts affected CASP as District Senior Managers had to take full charge of the several programs with inadequate capacity. • Most districts did not develop detailed project implementation plans on time and as such this led to a slow start for some of the projects.

32. Agric…reasons • In order to boost project performance and delivery, the department has: • Developed a Project Database which will improve the monitoring of the projects. • Initiated the buying of materials for fencing in bulk.

33. Health & Soc. Dev • Reasons that contributed to delays are the following: • For 15 of the main contracts, contractors went on site from the 15th of July, which negatively affected spending. • Delays on supply of medical equipment for the hospital projects, orders were issued in April 2005 but to due to delays in delivery, no payments were made for these projects in the 1st Quarter of 2005/06. • Spending on clinics (both new construction and upgrades), health centres and mortuaries was also hampered by delays in the documentation phase of project implementation (e.g. tender evaluations, etc in line with the Construction Industry Development Board (CIDB) guidelines which require contractors to be registered and categorised per amount of project that they can undertake).

34. Health… • The department is also taking proactive measures to ensure that delays are minimized, e.g. by appointing contractors early and having them take site before the scheduled departmental project starting time.

35. Health & Soc. Dev • Reasons that contributed to delays are the following: • For 15 of the main contracts, contractors went on site from the 15th of July, which negatively affected spending. • Delays on supply of medical equipment for the hospital projects, orders were issued in April 2005 but to due to delays in delivery, no payments were made for these projects in the 1st Quarter of 2005/06. • Spending on clinics (both new construction and upgrades), health centres and mortuaries was also hampered by delays in the documentation phase of project implementation (e.g. tender evaluations, etc in line with the Construction Industry Development Board (CIDB) guidelines which require contractors to be registered and categorised per amount of project that they can undertake).

36. Health… • The department is also taking proactive measures to ensure that delays are minimized, e.g. by appointing contractors early and having them take site before the scheduled departmental project starting time.

37. Possible risks of underspending • Education • Projects will be fasttracked to avert underspending. By yearend all the money will be committed. • Agriculture • This sector will underspend its budget by 15% (R35.6M). • Health & Social Development • This sector will spend about 90% of its budget (underspending of R42.5M) • There are 33 clinic project at a cost of R3M each which have just started. Some of the projects will start in Feb which will impact on spending. • Roads & Transport • The full budget will be spent. • About R179M was spent in Dec. • With the balance spent as follows: about R100M in Jan, about R100M in Feb and the balance, about R250M in March. • Rain could derail projects in other areas but the department is proactively moving funds to projects that are not affected by rain.

38. The End