Maximising value under expenditure constraints

If government is to maximise the value of its constrained spending, it will need to contain costs, exercise prudent and compliant financial management as well as eradicate wasteful treatment of public funds and resources.

The National Treasury emphasised this in the 2021 Medium Term Budget Policy Statement (MTBPS) tabled by Finance Minister Enoch Godongwana on Thursday in Parliament.

The Treasury said this was amid the realisation that municipalities had insufficient capacity to fulfil their financial responsibilities, with the report indicating that councils were over reliant on external financial consultants.

“Municipalities spent over R1 billion on financial reporting consultants in 2019/20, even though financial reporting is a core responsibility of their internal finance units,” it states.

National government provides a range of support and resources to help municipalities to build capacity.

In 2021, the National Treasury reviewed the system of capacity-building for local government. It found that the focus needs to shift from building capacity to a broader measure of developing capability.

The Treasury said while capacity was closely linked to individual improvements – such as developing skills – measures of capability considered a larger context and range of factors, including the environment in which the individual works, and the systems and processes they use.

“This has implications for the way the state designs support and the type of resources it provides to local government.

“Capacity-building programmes often fail because the problem is inadequately diagnosed, and there is a fragmented approach to building capacity. These programmes cannot create an internal culture of accountability and commitment: that is the responsibility of political and administrative leaders in local government,” reads the document.

The department said substantive changes were required to improve municipal capabilities.

The review proposed a new framework to build a capable local government by improving the current system incrementally and identifying pilot sites for innovation and experimentation

The 2022 Budget would detail the next steps in this project.

Source: South African Government News Agency