Progress Report on MTSF Implementation 2014-2019

1. THE PRESIDENCY PROGRESS REPORT ON THE IMPLEMENTATION OF THE MEDIUM-TERM STRATEGIC FRAMEWORK (MTSF) 2014-2019: ALIGNMENT OF SPENDING OUTCOMES WITH THE POA DR. TSAKANI NGOMANE BRIEFING TO THE STANDING COMMITTEE ON APPROPRIATIONS 1 SEPTEMBER 2015

2. APPROACH OF THE PRESENTATION • The focus of this presentation is on the monitoring and evaluation of the Medium Term Strategic Framework (MTSF) as government’s first five year implementation plan of the NDP, covering the financial years 2014/15 to 2018/2019 • The presentation is informed by the radical socio-economic transformation agenda. It is organised according to the following themes: • growing the economy; • strengthening society; • building a service oriented public service • Outcomes are organised to fit into the 3 afore-mentioned themes • Using the performance rating system, the presentation highlights progress in key targets, key challenges and what is being done to address these challenges. Where appropriate, links are drawn to the Nine Point Plan

3. WHAT IS THE MTSF AND WHAT DOES IT DO? • 14 outcomes in the PoA aligned with the National Development Plan:

4. WHAT IS THE MTSF AND WHAT DOES IT DO? (2) • The MTSF outcomes seek to address the triple challenges of unemployment, inequality and poverty espoused in the National Development Plan • The MTSF progress report draws on the Programme of Action (POA) reports presented by the outcome coordinating Ministers to the Cabinet Committees during the financial year • The report does not cover every target in the MTSF – for each outcome the report covers a selection of targets, strategic issues requiring change and provides pointers to critical future focal areas • By focusing on a limited set of key indicators, the methodology enables evidence-based assessment of progress against the NDP • The methodology helps us to focus on outcomes and impacts rather than just activities

5. WHAT IS THE MTSF AND WHAT DOES IT DO? (3) • Refinement of some indicators in MTSF chapters for alignment with SONA, the Nine Point Plan, and other recent developments • Proposed refinement timely as mid-2015 represents the end of the first year of the fifth Administration • Using the NDP as the blueprint, DPME and STATSSA are working with departments to ensure that indicators are refined so they are always measurable, accurate, reliable and time-bound. • Areas of under-targeting and over-targeting are being looked into and addressed, and consensus is sought across all contributing governments and spheres. The quality of the data used in the Nine Point Plan will also form part of this ongoing process to ensure credibility.

6. Outcomes planning and monitoring 2030 NDP Evaluations Strat planning/APPs 2019 MTSF 12 now 14 priority outcomes Programme planning Citizen-based monitoring FSD monitoring Front line services Presidential Hotline How government is managed MPAT Operations management Local Government LGMIM

7. CLASSIFICATION OF PERFORMANCE FOR THIS REPORT

8. Growing the economy

9. GLOBAL ECONOMIC OUTLOOK We are implementing the NDP in an unfavourable global economic environment • Global growth remains weak, affecting South Africa’s major trading partners • Slow global economic recovery continues to negatively affect our export markets and continues to impact on new investments • Global capital flows are likely to shift towards the US (away from developing countries), as the US recovers and interest rates rise • Growth in Africa remains strong for now, but lower commodity prices and higher interest rates are a major risk

11. Unemployment remains stubbornly high and virtually unchanged • Compared to the same period in 2013 (Jul-Sept), many jobs were lost in labour intensive sectors e.g. agriculture, manufacturing, utilities, finance & other business services and private households (282 000 in total) • Employment growth sectors over the same period last year were community services, including Government (140 000) and Construction (135 000) • Following a decrease of 122 000 jobs in the first quarter of 2014, employment increased by 39 000 in the second quarter of 2014 and by 22 000 in the 3rd Q

12. The contribution of productive sectors to growth & employment needs to be strengthened (1) Analysis • The ongoing weak global economic environment continues to have an impact on economic growth and constrains to historic export markets • Government capacity to identify levers to drive growth is not optimal • Relations with business are improving, but need to be more strategic What is to be done: • The focus on the Nine Priority Areas is gaining traction: • Unlocking increased private sector investment will require using the infrastructure programme to crowd in the private sector investment, improving regulatory efficiencies at all levels of government • Expand exports especially outside of Europe and China (and focus especially on Africa) by using new opportunities • Focus on trade promotion measures combined with more efficient regulation and possibly export-import financing, in Africa

13. Historically excluded and vulnerable groups and small businesses remain vulnerable Analysis • Small business is not meeting potential contribution to growth and employment creation • Interventions will be required to support existing and develop new small business and cooperatives to facilitate access to formal markets • Revise and develop supporting regulation to unlock SMME potential What is to be done • Regulations on targeted procurement to support SMMEs and co-ops must be gazetted • Resolve challenges related to the 30% set aside target for public sector procurement from SMMEs and co-operative and ensure the September 2015 target is met • Resuscitate and develop township and rural economies • Work with key metros to support reducing rep tape for small business

14. BULK WATER RESOURCES (1) • Analysis • Declining water quality and uncertainties about impacts of climate change, and water crises have emerged across the globe including South Africa • A number of policy interventions have been developed to improve equity in the allocation of water resources and improve investment into water infrastructure • The Mokolo and Crocodile River Water Augmentation Project Phase 1 is at Construction Phase with the de-bottlenecking phase. • This will result in an additional 57% of water delivered to the system, which will enable Eskom to commission four of its Medupi units and meet the forecasted high water demand scenarios until December 2015 • The Mzimvubu Water Project in the Eastern Cape is at Preliminary and Feasibility Study phase and has the potential to provide benefits to the surrounding communities and to provide a stimulus for the regional economy in terms of irrigation, forestry, domestic water supply and the potential for hydropower generation, amongst others – the project comprises of four main components

15. BULK WATER RESOURCES (2) • What is to be done: • Develop adequate plans in the case of emergent water sector turbulence in the short-, medium-, and long-term – this should lead speedily to an adoption for an inclusive, integrated National Water Plan that embraces the entire value chain – an integrated legislative and institutional framework is necessary • What is to be done: • Ensure that municipalities have adequate infrastructure and investment plans, including the necessary skills for capital investment and maintenance projects • Despite progress on certain projects there are some slow progress in certain bulk water projects such as the Mzimvubu Multi-Purpose Development Project • Complete Phase 1 of the Mokolo and Crocodile River Augmentation Project

16. DPME is working with DWAS to develop an Integrated Water Plan • The plan will cover all parts of the water value chain from resources development (management of river system, catchment areas, building of dams), bulk regional infrastructure (water treatment plants, reservoirs) and reticulation schemes. • Team is currently undertaking an assessment of the true extent of the water challenge - water resources availability, water losses, water demand, quality, climate change, pollution • Undertaking an overview of water requirements per sector • Assess infrastructure functionality and investment at all levels • Policy and regulatory framework • Human capital and institutional capacity

17. RURAL DEVELOPMENT (1) Land reform

18. RURAL DEVELOPMENT (2): Land reform • Analysis and what needs to be done: • Slow transformation in land reform is cause for great concern • Our baseline by November 2013 was 9.0% (i.e., of the 30% 1994 target – 82.5m ha), translating to 7.39m ha of 24.5m. The MSTF target is to transfer an additional 2m hectare (ha) by 2019. • By end March 2015, 350 750 ha of land were acquired and allocated against an annual target of 390 000 ha—raising the baseline to 9.4%, or 7.74m ha. • We had committed to allocate 10 % of the newly acquired hectares of land to people living and/or working on farms, and 50% to smallholders. The sector had however, under-performed on both targets • Both these actions are critical to the change agenda, where slow progress had resulted in labour disputes and farm worker unrests • Rural unemployment is rising from 46.1%, Q4:2014 to 47.7%, Q1:2015, and agriculture’s contribution to GDP had declined by 16.6% from Q3 • Work led by the Deputy President developing a Social Compact for the agricultural sector is likely to accelerate transformation

19. RURAL DEVELOPMENT (3): Improved food security

20. RURAL DEVELOPMENT (4): Improved food security Vulnerability to hunger and access to food, 2002—2014 (GHS 2014, May 2015) • A drop in vulnerability to hunger and access to food in 2014 from 2010, but largely due to social grant rather than food production initiatives • Efforts to improve food security need to be intensified and accelerated. The development of an integrated plan to food security and nutrition, is likely to improve performance.

21. INFORMATION AND COMMUNICATIONS (ICT) INFRASTRUCTURE (1) • Analysis • Inadequate infrastructure in rural communities remains a challenge. There are initiatives underway to focus rollout of infrastructure in rural areas while minimising duplications in infrastructure. • Coordination of SIP 15 has improved in the last 12 months because there has been engagements with the Department and new Minister, formation of provincial structures for the coordination of ICT infrastructure rollout. • The impact has been the alignment of planning in terms of infrastructure rollout, visible progress reports on implementation and plans aimed at improving access to ICTS. • Though broadband prices, especially data, have decreased significantly, further work still needs to be done from both a regulatory and policy point of view. • The rapid deployment of electronic communications networks is not fully enabled, thus delaying the large scale and rapid deployment of ICT infrastructure • Funding for Broadband remains a challenge. There are discussions underway with National and Provincial Treasuries to unlock constraints to funding

22. ICT INFRASTRUCTURE (2) • What is to be done • Fast track policy and regulatory interventions to ensure rapid deployment and to reduce cost of broadband rollout is required to ensure we expand ICT access in SA. This includes support of an Open Access Policy Regime to change the market structure and reduce barriers to entry and infrastructure duplication • Fast-tracking the implementation of the rationalisation of ICT SOCs i.e. Broadband Infraco, Telkom and SITA in order to streamline and strengthen the rollout of broadband. • Unlocking of funding constraints through further engagements with Provincial and National Treasuries. • Speed up and ensure a clear strategy is developed for the relevant departments to move towards e-services

23. Strengthening society

24. QUALITY BASIC EDUCATION (1)Infrastructure and Learner Teacher Support Materials

25. QUALITY BASIC EDUCATION (2)Infrastructure and Learner Teacher Support Materials • Analysis • Although the building of ASIDI schools is improving, targets are not met and school sanitation still remains a challenge • Although the infrastructure norms and standards have been published, we cannot determine the extent to which schools are meeting infrastructure norms, a risk for litigation is high if schools are not meeting these norms • Processes developed by DBE to monitor build projects are slowly maturing, but some provinces still struggle to spend their education infrastructure budgets. By end of March 2015, provinces had spent average of 93% of allocated budgets. Eastern Cape and North West (81%) ;Free State (78) and Mpumalanga (75% ) spent below average • Systems for distributing Learner Teacher Support Materials have improved, however, measuring the target of one textbook per learner for each subject remains a challenge • As long as there is no mechanism for tracking curriculum coverage, improving pass rates at grade 9 and 12 will remain a challenge

26. QUALITY BASIC EDUCATION (3)Infrastructure and Learner Teacher Support Materials • What is to be done • Improve reporting on progress on ASIDI to clarify targets, outputs (completion and handing over) • Fast track implementation of processes developed by DBE to monitor build projects and improve provincial expenditure on education infrastructure budgets • Develop a system for tracking whether schools meet the infrastructure norms. This is critical to ensure that DBE knows the extent of the problem • Fast track systems to measure learner access to teaching and learning materials • Implement effective tracking systems for curriculum coverage to improve learner performance and the quality of basic education.

27. ANNUAL NATIONAL ASSESSMENTS (ANA) (4) • Analysis • Grade 3 targets in both literacy and numeracy exceeded, including Grade 6 Home Language • Performance in Grade 6 & 9 Maths and First Additional Language is below par • What is to be done • Make verification ANA comparable across the years • Increase support for teachers in Grade 6 and 9 to close knowledge gaps

28. NATIONAL SENIOR CERTIFICATE (NSC) (5) • Analysis • Targets for Bachelor, Maths and Physical sciences were not met. There was a decline in passes compared to 2013 which was accompanied by fewer number of learners sitting for matric • What is to be done • Fast track and strengthen the implementation of the Maths Science and Technology Strategy for ensure improved teacher supply, training and development • Urgently implement tracking curriculum coverage

29. A LONG AND HEALTH LIFE FOR ALL SOUTH AFRICANS (1) Improving Quality of Care • The Office of Health Standards Compliance (OHSC) continuously assesses the quality of health service delivery and entrenches a culture of quality health services • Patient satisfaction surveys conducted in 49% of public sector facilities found that 76% of users of public health services were satisfied with service provided Re-engineering of Primary Health Care • Significant progress made includes improved access to Primary Health Care (PHC) for communities, with 1748 Ward Based PHC Outreach Teams being functional, which exceeded annual target of 1500 • District Clinical Specialist Teams with at least three specialists were established across districts nationally

30. A LONG AND HEALTH LIFE FOR ALL SOUTH AFRICANS…2 HIV & AIDS and Tuberculosis prevented & managed • 9.5 million HIV tests conducted, against 2014/15 target of 10 million • Access to ART for people living with HIV and AIDS expanded with 3.1 million people placed on ART, exceeding 2014/15 target of 3 million • Screening for Tuberculosis (TB) has been expanded, with 15.2 million people reached, which exceeded the target of 6 million • The new pulmonary TB defaulter rate and the TB death rate have both declined and remained consistent with the set targets for 2014/15 Improving Maternal and Child Health • Efforts to prevent mother-to-child transmission of HIV continued to yield the desired results, with only 1.5% of babies testing HIV positive at 6-weeks. This exceeded the set target of 2% • Full immunisation coverage rate (90%) for the under 1-year of age was achieved, which was consistent with the set target of 90%

31. A LONG AND HEALTH LIFE FOR ALL SOUTH AFRICANS…3

32. A LONG AND HEALTH LIFE FOR ALL SOUTH AFRICANS…4 Universal Health Coverage achieved through implementation of NHI • Finalisation of the White Paper on National Health Insurance (NHI) has lagged behind, and has impacted on the production of the NHI Bill, which was targeted to be released for public consultation in 2014/15 • The health sector has continued to provide technical support visits to the 10 NHI pilot districts across provinces, which is commendable. The MTSF 2014–2019 target, however, was to review the pilot sites and progressively expand to other districts-based on the results of the review. Prevention and Management of Non-communicable Diseases • Although the health sector has produced the National Strategic Plan for Non-Communicable Diseases (NCDs) for 2013-2017, the counselling and screening users of public health services for key NCDs has significantly lagged behind the set targets for 2014/15. Screening awareness raising requires strengthening. The creation of the National Health Commission to ensure inter-sectoral action to address the social determinants of health also requires acceleration

33. WHAT IS TO BE DONE (5) • National Treasury and National DoH to finalise the NHI policy and legislative frameworks, as well as the funding modality • Finalise the review of the NHI pilot sites to identify key milestones attained, constraints encountered and inform expansion of sites • Managers in the health sector should continuously carry out internal monitoring of the quality of service delivery, and use this monitoring to inform service delivery • Strengthen the screening of NCD interventions among users of public health services and raise awareness amongst communities at large • Operationalise the National Health Commission to ensure inter-sectoral action to address the social determinants of health • Identify and implement intersectoral interventions with other sectors to address the matter of severe acute malnutrition among children • Implement effective measures to turn around the financial audit outcomes • Finalise the review of the NHI pilot sites to identify key milestones attained, constraints encountered and inform expansion of sites • Fast-track the implementation of Operation Phakisa in health

34. SUSTAINABLE HUMAN SETTLEMENTS (1)

35. SUSTAINABLE HUMAN SETTLEMENTS (2)

36. SUSTAINABLE HUMAN SETTLEMENTS (3) • Analysis: • Overall – good progress on housing delivery 120 375 of target of 149 000 (80.8%) • Weak performance in Upgrading Informal Settlements – 74 017 to the annual target of 150 000 (49.3%) • Master Spatial Plan - target achieved; need to incorporate Investment Framework • 50 Catalytic/250 integrated projects not defined - target not achieved • Delay in getting Green/White Paper Framework approval – has negative impact on concluding revision of Human Settlement policies • Fair progress on Consolidation of DFI’s, process underway • Fair progress with Municipal Accreditation programme but outputs remain imprecise • Unsatisfactory Social/Rental performance – 49.9% (aligning rental programmes within yet to be completed rental policy framework) • Unsatisfactory Finance Linked Institutional Subsidy Programme (FLISP) performance • The title deed backlog largely remains unaddressed; and the deficit in transferring titles to new subsidy residents means the backlog is growing • Data reliability/consistency in NDHS M&E and Planning (weak alignment)

37. SUSTAINABLE HUMAN SETTLEMENTS (4) • What is to be done • Resolve MTSF performance and target definitions with provinces, metros and agencies (& between NT and NDHS) and reconcile to Strategic Plans/APPs and metro plans (BEPP’s) - reconcile multiple reporting systems • Scale up upgrading of informal settlements (reconcile support programmes) - use of USDG to be increased; consolidation of support programmes NUSP & PHP • Define Rental Policy Framework and Strategy to improve rental delivery • Rationalisation of DFIs to be reconciled to policy framework being prepared • Finalise outstanding issues around accreditation • Expenditure Reviews and Evaluations recommendations to be presented for MINMEC approval and used as key informant to White/Green Paper (i.e. Rental and Affordable Housing Frameworks) • Finalise catalytic projects and secure/reconcile funding arrangements (define 50 of the 250 integrated projects) • Finalise Mining Towns, Strategy/Implementation Plans • Expedite Title Deed transfers for reducing backlog • Complete Green Paper and commence with sector consultation and table in Parliament

38. SAFETY AND SECURITY (1)Detection rate NB Targets are below baseline because of a change in the measurement methodology

39. SAFETY AND SECURITY (2)An efficient and effective criminal justice system

40. SAFETY AND SECURITY (3)Corruption in the public and private sectors reduced

41. WHAT IS TO BE DONE (4) • What is to be done • Enhance implementation of crime prevention and combating strategies, in particular, increase visible policing • Ensure greater partnerships with citizens by operationalising Community Policing Forums (CPFs) and especially Community Safety Forums • Moral Regeneration initiatives to be intensified in conjunction with the Social Cluster • Increase the investigative, forensic and prosecuting capacity • Corruption combating strategies must be urgently implemented • The Draft Border Management Agency Bill will be considered by Cabinet next week • All departments to develop individual Drugs Master Plans (DMPs) in line with the National Drugs Master Plan to address substance/drug abuse • Finalise and ensure approval of Gangsterism strategy and Action Plan

42. Building a service oriented public service

43. ACCESS TO BASIC SERVICES (1)

44. ACCESS TO BASIC SERVICES (2) Analysis • The pace of delivery is not satisfactory to meet the 2019 target • The “HHs connected to grid” target could be met if number of connections scale up to 280 000 per annum. • The absence of a credible project management and delivery planning approach is the major reason for the lacklustre performance What is to be done • Improving delivery performance will require a project management approach to tackling the planning and institutional constraints experienced. In this regard a business strategy was developed and approved by Cabinet to tackle the obstacles and strengthen coordination. • The initiative will be coordinated by MISA and will comprise the key sector departments, NT & DPME. The objective of this joint operation would be to fast track the planning and implementation of projects & operations & maintenance requirements in the priority districts.

45. FINANCIAL & ADMINISTRATIVE MANAGEMENT (3) Analysis • In the past year municipalities have been supported to develop post audit action plans and ensure they are tabled to Councils • 271 municipalities assessed for adequacy in addressing the issues raised by AG • Debt owed by municipalities is being responded to but debt owed to municipalities to not given sufficient attention • Debt owed to municipalities is close to R100 billion (almost double the amount since 2009) What is to be done • The support work has been extensively initiated in the current period and the impact on audit outcomes will only be known when the 2014-15 audit results are released around June 2016. • The extent of irregular expenditure is a concern particularly in respect of those municipalities where contracts have been awarded to friends and families. This goes beyond just an audit issue and borders on corruption and nepotism. Serious cases should be investigated by DCoG and NT and the Cabinet be advised of appropriate interventions • A clear policy response is needed to address the low payment levels and how to deal with the accumulated debt much of which is considered to be unrecoverable

47. ANALYSIS (5) • During January 2015, the Rand value of invoices paid after 30 days from the date of its receipt amounts to R 382 million whilst the amount for February 2015 amounts to R 378 million, thereby representing a marginal improvement of 1.0% amounting to R 4 million. • When comparing the amount paid after 30 days in February 2014 (R327 million) with that of the amount paid in in February 2015 (R378 million), it is evident that there has been a regression of 15.6% regression amounting to R 51 million. • For the period January 2014 to February 2014, the average Rand value of invoices paid after 30 days from the date of its receipt amounts to R441 million whilst the average for the period January 2015 to February 2015 amounts to a R380 million, representing a 13.8% improvement amounting R61 million. • The average for the period January 2014 to February 2014 is distorted due to the high Rand value of invoices that were paid after 30 days in January 2014 amounting to R554 million.

48. WHAT IS TO BE DONE Analysis • A key challenge to building effective institutions is to ensure stable leadership. Data available indicates that on average HoDs stay in a post for only 2.7 years. • In addition to the high turnover, that often accelerates after the appointment of new Executive Authorities, the MPAT 2014 data show that 64% of departments either do not have performance agreements in place or it was submitted after the due date and assessments were not done What is to be done …some progress • Special Unit has been established in DPME to investigate cases where there is late or non-payment of correct invoices within 30 days • To address the still lengthy delays in resolving disciplinary cases: • All departments must capture management of disciplinary cases on PERSAL • Outstanding Performance Agreements must be submitted urgently and backlog assessments must be finalised by EAs and HODs before December 2015 • DG in the presidency has established a team (including DPSA and DPME) to manage the political-administrative interface and career incidents

49. Critical Role of Planning Monitoring and Evaluation

50. If we don’t know how we will make it happen it is unlikely to happen Key issues • We need to know where we want to go: • NDP, MTSF, outcomes • We need to focus on outcomes we want to achieve, not just the activities we do (outcome or results focus) – and then plan how we will get there • Outcome delivery agreements, programme planning • We have to monitor whether we are getting there (MPAT, FSD, outcomes) • And we have to evaluate if we are getting to where we want to get to, what impact we are having, are we being effective, efficient, delivering value for money etc