National Treasury says it’s serious about cutting waste and is looking at “merging or closing entities to reduce duplication of functions”.
It says this duplication resulted in “massive inefficiencies in some infrastructure programmes” and this was one of the reasons it was piloting the use of zero-based budgeting, were spending on programmes and projects had to be justified every year.
As things now stand the current system of incremental budgeting allowed for the creation of “perverse incentives to enter into contracts that have high unit costs for the delivery of certain services”.
Aside from zero-based budgeting, Treasury has nothing new to add on what President Cyril Ramaphosa had already pledged to do when it come to pushing through much needed economic reform in his State of the Nation Address a few weeks ago.
It reiterated the president’s commitment to implement Operation Vulindlela – a joint initiative by the Presidency and Treasury – to push through economic reforms.
Operation Vulindlela’s goals are to increase electricity generation capacity, support industrial growth and the rollout of infrastructure and creating and enabling an environment for business.
This will see the implementation of some long-delayed policies and projects like:
- Moving TV broadcasting from analogue to digital transmission by March 2022
- Finalising policies to ensure the rapid rollout of 5G infrastructure
- Reviewing the regulatory framework and processes that make it difficult to import scarce skills
- Finalising the policy to improve freight and commuter rail
- Finalising the policy to improve the efficiency and competitiveness of the ports
- Reviving the Green Drop and Blue Drop programmes to strengthen water quality monitoring
Operation Vulindlela has only been going since October 2020 but it’s already claiming some victories, like allowing municipalities – which are in good financial standing – to source their own electricity from independent power producers.
As part of its efforts to offset the fallout of the Covid-19 crisis, 430 000 of varying duration have been supported through various public employment initiatives. An additional 180 000 are currently being recruited.
It also noted that there is now a pipeline of R360 billion to develop infrastructure in the energy, water, transport and telecoms sectors.
The Small Business Finance Agency has provided R233 million in support to 26 small-scale manufacturers and financial support to 66 local enterprises.
Efforts have also been made to support investments in the poultry, clothing and automotive sectors. In addition, large sugar producers have agreed to buy 80% of their sugar from local growers.
Although some progress has been made, Treasury is aware more needs to be done.
“While some progress has been made, decisive action on structural reforms is critical to strengthen the economic recovery, inspiring investor and public confidence, and improve South Africa’s growth trajectory.”