South Africa North West Province 2015
The assessment of PFM performance in North West Province reveals major strengths in a number of important areas. The assessment, however, also points to weaknesses in other core PFM systems and processes that have led to low scores in the period covering fiscal years 2011/12 to 2013/14.
Public finance management (PF) tools and capacities in the ground are not essentially commensurate with the more rapid growth of public investments and the more effective procurement and control processes required for enhancing the efficiency of service delivery and boosting more rapid and pro-business economic growth. One salient feature is that managing the use of budgeted resources in the province is always guided by a general strategic focus set forth by the national government. Yet, the overall budgetary outcomes suggest that the budget is not for the most part implemented with due regard to government policy. Also, the low predictability in the release of funds to non-salary expenditure programmes has severely restrained the efficiency in the provision of economic and social services locally.
As the provincial economy seeks to grow more rapidly, the North West provincial government faces the task of spending more efficiently and restraining the growth of consumptive expenditures and tuning up increases in the public sector wage bill and the procurement of public works within the capacity and absorptive limits of the province. The challenge of building the necessary skills and capacities locally remains high, as is the challenge of laying down the key economic infrastructure with which to sustain economic growth and ease the way for enabling a more engaging private sector and mobilising new domestic resources away from national grants.
In general, the provincial government has been provided with major building pillars for enabling an open and orderly PFM system and achieving fiscal transparency over the last three years. This has resulted in, among others: • The transparent and sustainable medium-term expenditure framework (MTEF) mainly for the accountability in the use of cash resources and sourced by national and own revenues, with a well-managed, supervised, and regularly audited Provincial Revenue Fund (PRF); • A well-structured budget process, including an active participation by the province's Executive Council; • The use of a modern cash accounting system which enables regular reconciliation of government's bank accounts and advances; and • A treasury single account (the PRF) that has progressed to cover the execution of all budgetary transactions. The assessment has also detected high risk areas including the following: o monitoring the fiscal risk of public entities and municipalities; o forecasting of the provincial budget revenue and expenditure estimates; o cash management; o procurement, and o Internal financial controls.
Legislation on budget and financial management, and public service has supported PFM reforms for the past two decades. It is desirable that new supplementary regulatory and institutional reforms and the upgrading of systems solutions would be established to complete the reform agenda under the cash accounting standard and in certain core areas of PFM, before the pursuance of any further efforts in favour of adopting accrual standards of accounting.