The Committee is generally satisfied that the Department continues to make progress in reprioritising both its activities and the deployment of resources. It also appears that the Department has been allocated sufficient funds in the 1997/8 budget to carry out the important tasks assigned to it.
The main trends in the 1997/8 budget are:
* a further decline (by one third of the 1996/7 level) in anticipated payments under the General Export Incentive Scheme (GEIS). The GEIS, which will be phased out by the end of 1997, is expected to account for 34,7% of the Department's total budget in 1997/8, compared to 48,6% of that in 1996/7.
* An increased allocation to various supply side measures, which will absorb approximately R 1,5 billion - or nearly half the budget.
* The allocation to Small, Medium and Micro-Enterprises (SMMEs) of an estimated R 873,8 million, including SMMEs' share of supply side measures. This represents 26,2% of the total budget..
All of these trends are not, however, immediately evident from the information provided in the printed estimates (RP 2-1997). For example, the published estimates appear to indicate that only 2,9% of the Department's budget will be allocated to small business development. It was only in a tele-conference interaction with the top management on March 14, that we were informed that the item under this heading in the printed estimates represented only part of the funding that would be made available to small business - that channelled through the Chief Directorate of Small Business promotion. When funding to be channelled through other directorates in the Department were also taken into account, the amount available to support small business, we were told, would in fact be as follows:
| 1. Ntsika (non-financial support services) | R 46,4 million |
| 2. Khula (capacity building for retail financial services) | R 36,8 million |
| 3. National Small Business Council (private sector development) | R 3,6 million |
| 4. Other Directorates within DTI: | |
Small Medium Manufacturing Development Programme |
R 92,0 million |
Competitiveness Fund |
R 5,0 million |
Export Marketing Assistance |
R 13,0 million |
Sector Partnership Fund |
R 9,0 million |
| Equity, Loan and Credit Guarantee: | |
Small Business Development Corporation |
R 240,0 million |
Khula |
R 250,0 million |
| TOTAL | R 873,8 million |
This example highlights a general problem that the Committee believes needs to be addressed in budgetary reform: The current standard format and presentation of budgetary information does not provide readily accessible information that enables either the public or parliament to assess the effectiveness of transformation of departments or the reprioritisation of resource allocation. It is impossible without seeking further clarification to identify what resources are being allocated to what activity or envisaged outcome - as distinct from bureaucratic division within a department. Nor does the standard presentation indicate what outputs and outcomes are envisaged, what performance targets have been identified and how performance in previous years is measured and assessed.
The Committee was pleased to learn that the Department is engaged in a process of financial management reform, and that within the framework of overall budgetary reform is preparing to relate programmes to defined outcomes and to introduce performance criteria. The Committee welcomes these initiatives, and would appreciate the opportunity to engage the Department on these matters not just after the next budget is tabled, but in the course of the year as the next budget is being prepared.
Another matter of concern is the open ended nature of GEIS payments. The scheme works on the basis of post hoc claims by businesses that meet the criteria laid down. Qualifying businesses have a right to these payments whether or not sufficient funds have been budgeted. The Committee is aware of concerns in the Department that growth in exports of manufactured goods could create a situation in which claims exceed the amount budgeted, and in which GEIS payments considerably reduce funds which should be deployed for supply side programmes. This matter has been put to the Nedlac Trade and Industry Chamber. The Committee supports an active exploration within Nedlac of options to avoid the GEIS programme, which is in any case being phased out, impinging on funds that should be allocated to other programmes that are essential to meet the challenges facing us.
Other matters that the Committee believes need attention are:
* the efficiency of, and extent to which we are getting value for money, from a number of the new programmes - including cluster studies, tax incentives, SMME support programmes. The Committee appreciates the importance of each of these, but is aware that existing programmes in these areas have had mixed results and are being refined to improve delivery.
* the impact on employment of various measures being proposed and implemented. While we are aware of the difficulty of measuring this in some cases, promoting employment is the fundamental objective of many programmes and some criteria for measuring progress in this regard, as well as, in general, measuring accurately trends in employment, are urgently needed.
* the process of staff restructuring. Voluntary Severance Packages accounted for most of the Department's additional expenditure in the 1996/7 adjustment budget. We were told that the Department expects its staff complement to decline by 30%, but anticipates that its skill base with strategic capacity will improve. Monitoring the process to assess the extent to which such expectations are being realised is clearly a matter of major importance.
The Committee looks forward to receiving regular briefings on these and other relevant matters in due course.