STATEMENT BY DEPUTY PRESIDENT ZUMA ON PROGRESS IN THE ALLOCATION OF POVERTY RELIEF FUNDS

Issued by: GCIS

29 March 2000

As you will remember, Cabinet decided a fortnight ago to investigate expenditure of Poverty Relief Funds by all relevant departments.

This is meant to ensure that this instrument is used effectively for the purpose for which it was established: to urgently improve the conditions of the poorest of the poor.

A preliminary report on the Department of Welfare was presented to Cabinet this morning. The Minister will elaborate on its content.

What we wish to state is that the President instructed us to speed up this process precisely because of his concern, and that of government, that we should meet our mandate to improve the quality of life of the most vulnerable sectors of our society. It would be inexcusable if the meagre resources at our disposal were not reaching the intended beneficiaries.

The investigation has established that public discussion on this matter has not taken into account the positive work that has been done by the Department over the past few years.

What has not received sufficient attention, and what Cabinet was concerned to ascertain, are the following important facts:

• R50-million of Poverty Relief Funds allocated to the Department in 1997/98 was spent. However, a number of critical lessons had to be integrated into future planning for such allocations.
• Though much of the R203-million given to the Department in 1998/99 had been allocated to the disbursing agency (IDT), this, in strict auditing terms, was not reflected as expenditure. Precisely because they were committed, the funds were rolled over the following year.
• As at the beginning of March 2000 (i.e. this month), 67% of funds transferred to the IDT had been disbursed to about two-thousand projects, constituting about 57% of the R243-million of the accumulated Poverty Relief Funds. In fact, only R17-million ohe R293-million received by the Department since 1997 has not been committed. In other words, over 94% of the funds have either reached the projects on the ground, or have been committed.
• Payments are made in tranches on the basis of approved plans (40%), project assessment (50%) and completion of the project (10%). Therefore, because projects do not take a financial year to complete, there will naturally be a discrepancy between commint of the funds and actual expenditure.

The experience of developing capacity in implementing new government programmes is one that we have gone through since the new democratic government was established. This is because of the new focus of this government, towards alleviating the conditions of the poorest of the poor.

While acknowledging the many weaknesses that need urgent attention, we are convinced that the Department of Welfare, and government as a whole, are handling the matter the best they can. Among the primary considerations in dealing with these disbursements, is to ensure that government is not stampeded into precipitate action that would result in widespread fraud and corruption.

Partnership between government and civil society - which the Minister has undertaken to further strengthen - will also go a long way in improving our work. Consultations in this regard, particularly with religious bodies and other NGO's have been intensified.

CRITICAL DATES ON 1998/99 AND 1999/2000 ALLOCATIONS

19 October 1998

Department received allocation of R203 million in the Adjustments Estimate for 1998/99 January 1999

IDT approached by department to serve as agent

3 March 1999

Approval of business plan for the Poverty Relief Programme, by Department of State Expenditure

30 March 1999

Contract with the IDT finalised and signed

31 March 1999

R81.272 million (representing 40% of the R203 million) was approved for transfer to the IDT to disburse to projects. Payment to IDT was made through a suspense account. This was a control measure as legal and administrative matters on individual projects still had to be finalised. The intention to transfer the funds via a suspense account was brought to the attention of the Department of State Expenditure and the Office of the Auditor-General. As the payment was made via the suspense account, it could not be reflected as expenditure in the 1998/99 financial year.

8 April 1999

IDT received R81.74 million in its account

May 1999

IDT commenced disbursement of first tranch (40%) to approved projects.

August 1999

Approval by Department of State Expenditure to roll over the R202.95 million, on the basis that the funds had been committed. The R81.272 million initially transferred to the IDT via the suspense account was included in the request for roll-over R50 000 had been spent on administration costs. September 1999

R14 million of the 1999/2000 allocation was transferred to the IDT to pay cluster co-ordinators (These are NGOs and individual contractors who provide support to provincial projects). October 1999

R109.826 million approved for transfer to the IDT for second tranch payments to projects.

November 1999

Adjustment Estimates for 1999/2000 - roll over of R202.95 million. The original 1999/2000 allocation of R50 million was reduced to R40 million. The total amount available for poverty relief fund was therefore R242.95 million.

November 1999

Second tranch payments to projects commenced