Statement on Cabinet meeting of 29 March 2000

29 March 2000

Statement on the Poverty Relief Programme by Dr Zola Skweyiya, Minister for Welfare and Population Development

The Issues

The report of the Auditor-General on the Budget Vote of the Department for 1998/99, raised concerns about the increasing proportion of under-expenditure by the Department of Welfare since 1996/97.

A major part of the under expenditure in 1998/99 was attributed to the Poverty Relief Fund. The Department received R203 million in October 1998/99 from the infrastructure and Investment Fund for its Poverty Relief Programme.

Between October 1998 and end of the financial year, the Department designed and develop a model of disbursement that is consistent with its aim of mainstreaming a development approach in all its projects and programmes. Since the Department lacked the capacity to disburse the funds a disbursing agency was identified in the form of the IDT.

Before the end of the 1998/99 financial year, the Department transferred R81 million to the Independent Development Trust (IDT). The transfer of funds was paid from the suspense account for control purposes as a number of administrative and legal procedures with regard to individual projects were to be finalised. The amount transferred to the IDT was therefore not reflected as expenditure in 1998/99.

Approval was received from the Department of State Expenditure to roll-over R202 950 000 of the Poverty Relief Allocation to the 1999/2000 financial year. The original allocation of R50 million for 1999/2000 was reduced to R40 million. The total amount of funds for Poverty Relief in 1999/2000 was therefore R242 950 000.

The allocation of funds for the period is shown in the table below.

Year Projects Allocation
(R203 million)
1935 Provincial Projects Selected and recommended by Provincial Departments of Welfare (including capacity building for projects) R111 846 297.21
  39 National Projects (recommended by the National and other government departments) (including capacity building and administrative costs) R 91 153 702.79
(R40 million)
159 Cluster co-ordinators who provide support to provincial projects R14 million
  Integrated Rural Development Strategy R9 million
  National and Provincial Projects to be approved R17 million

The overall expenditures of the total amount of R203 million as at 1 March 2000 is R133,108 622.05.

The balance of R69, 891 377.95 is to be paid to poverty projects in keeping with the disbursement cycle of tranches allocated according to 40%, 50% and 10% on projects completion.

Eighty six percent (86%) of funds due to provincial poverty projects have been disbursed and is close to the target of ninety percent (90%).

Corrective measures introduced by Minister

A number of corrective measures are underway to address the problems in the Department of Welfare’s poverty programme.

  1. One of these measures is a financial audit of the poverty relief disbursements made in the 1997/1998 and the 1999/2000 financial years. Arthur Andersen and Company have been appointed to audit the R50 million disbursed in 1997/98. The State Tender Board has approved the use of a restricted tender method to fast track the appointment of auditors for the R203 million being disbursed in the current financial year.
  2. An audit of the skills, organisational structure and organisational processes in the entire department will be completed by 31 March and this information will be used to restructure the department and ensure effective human resource planning in line with service delivery objectives.
  3. I held a special MINMEC meeting with provincial MEC’s on Friday 24 March 2000 on the poverty relief programme. The meeting reviewed the responsibilities and respective roles of national and provincial departments with regard to the full range of issues on poverty relief, including that of disbursement agencies and NGO project co-ordinators.
  4. Since October last year I have been holding consultations with a number of faith based organisations and NGO’s working in the area of poverty relief and social development. These consultations will be concluded by the end of March this year and a plan drawn up on ways of improving the planning, capacity building, disbursement, monitoring and impact assessment processes of the poverty relief programme.
  5. Additional ways of disbursing funds to provinces and national projects are under consideration. These include a partnership approach with NGO’s faith based organisations and intergovernmental departments at all levels.
  6. Protocols for these partnerships are to be drawn up specifically for the implementation of the Poverty Relief Programme.
    Protocols for partnerships will have acceptable guidelines for the selection of projects, disbursement procedures, financial and professional accountability, reporting, communication, monitoring and evaluation.

    The New Public Finance and Management Act sets very specific guidelines for the allocation and use of public funds.  We cannot outside these guidelines. We will have to ensure that the national and provincial departments as well as other partners have the requisite procedures and systems for financial control, monitoring and accountability.

  7. At a political level: I have proposed that a sub committee of MINMEC be set up to assist in providing National oversight of the poverty relief programme.

I have also urged MECs to establish Provincial Poverty Relief structures to provide provincial level monitoring and assessment functions. These structures should include representation from the NGO, religious and community sectors.

Issued by: Government Communications (GCIS)