The Western Cape Provincial Treasury briefed the Standing Committee on Supply Chain Management performance information (Data Mining and Dash Boarding) and on the Inequality Trends Report by Statistics South Africa.
The Western Cape Provincial Treasury explained – in very technical terms and with many acronyms – how the data systems used by the Provincial Treasury have separate components for paying suppliers, registering suppliers, tracking infrastructure and monitoring performance. A new computer system will operate “on top” of all the underlying systems and bring together data that will be vital for monitoring and decision-making on procurement. This is an interim measure as National Treasury is still working on a national “integrated financial management system” for government – which has been underway since 2003.
Members commented on the technical obscurity of the presentation and the need for Treasury to have simpler ways of communicating. They questioned why municipalities paid widely differing prices for the same quality of photocopy paper and whether the procurement system generally devoted adequate attention to value for money. Members were concerned that there was a perception about government procurement systems being corrupt and that people unfairly labelled politicians as corrupt as a result of that. Members said they did not understand why ineffective suppliers were still being used by Provincial Government departments after being red flagged several times.
The Treasury briefed the Committee on Inequality Trends in South Africa: A Multi-Dimensional Diagnostic of Inequality published in November 2019 by Statistics South Africa. Labour market income was said to be overwhelmingly the largest contributor to income inequality when compared to other income sources. Social grants and remittances have played a crucial role in reducing the income inequality gap between the bottom and top income deciles over the years in South Africa. The presentation gave provincial information and comparisons in very few instances.
Engagement with Members on the presentation was restricted because the meeting had run over the prescribed time. Members said that statistical reports should not only look at inequality but should look at the actual income levels of the poor.
Ms Nadia Ebrahim, Director: Asset Management for the Western Cape Provincial Treasury, began with a presentation on Data Mining and Dash Boarding for monitoring Supply Chain Management (SCM) Performance Information. [The presentation was laden with graphics, which may be viewed in the electronic file].
The Problem Statement was summarized as follows:
Systems problems at present
- Data analysis is in many areas currently a labour intensive process;
- The Provincial Treasury’s Kitso System requires intervention for service that puts data in a format that requires further work around, cleansing and analysis;
- Data interfaces from different financial and non-financial sources are not always possible, is not done or requires further manual or labour intensive processes;
- Data integrity is problematic; and
- Kitso information is only from the Basic Accounting System (BAS), and does not reconcile with the Logistical Information System (LOGIS), the Personnel Administration System (PERSAL), the Integrated e-Procurement Solution (IPS) and Western Cape Supplier Database (WCSD). information
Procurement problems at present
- Lack of ability to depict Preferential Procurement focus from a socio-economic perspective
- Have oversight and surveillance over critical SCM high risk compliance issues that pose governance risks
- To enable the move from a basic compliance agenda to a performance one by producing procurement information in a format that supports and improves management decision-making
The Provincial Treasury needs a spend analysis of procurement and an ability to visualise the terrain of procurement.
A Response Plan outlined the following components of the initial need in 2013-14
- Improve logistics management activities;
- To strengthen relationships with suppliers and customers;
- Seamlessly integrate supply and demand activities across provincial departments;
- To monitor departmental spend within allocated budgets;
- Improve procurement planning; and
- Identify strategic commodities
Post 2015 the following Evolving Needs have also been identified
- Promote better procurement planning;
- Improve visibility in spend and the achievement of efficiencies in expenditure management;
- Improve decision making;
- Achieve value for money in procurement
- Data analytics and visualisation tool to facilitate the analysis and extracting of data;
- Position commodities based on strategic drivers and develop commodity strategies for identified functional areas or per requests from departments; and
- Establish and report on supplier positioning strategies.
Data Analysis and Visualisation involve distinct but interlinked components:
- Data Gathering: Gathering or extraction of data from the Western Cape Government (WCG) databases or legacy systems and/or other sources, the integration, structuring and mapping of the data from various data sources.
- Data Validation and Cleansing: The service should provide for the identification of errors in data through validation rules, exception reporting or similarly appropriate mechanisms. It must be possible to detect and correct anomalies or gaps in data.
- Data Integration or Enrichment: The ability to augment the WCG spend data with supplier performance data, risk management, compliance information or other identified sources in order to enhance the business intelligence analysis or value added analysis of the data.
- Data Classification: The categorisation of data in terms of commodity classification system
- Data Management Service: Monthly update of data
- Data Analysis Tool (Licensing): Microsoft Power Business Intelligence (BI) used to build the platform for data mining
What is a Self-service Business Intelligence (BI) tool?
Self-service business intelligence (BI) tools are data analytic tools that enable business users (analyst, managers, practitioners etc.) to access and analyse business data without the involvement of the information technology (IT) division. The self-service approach lets end users create reports that help them understand and analyse data. It also allows users to present data visually within the tool in a meaningful way.
- Fast Analytics: Connect and visualize data in minutes
- Ease of Use: Anyone can analyse data with intuitive drag and drop
- Big Data, Any Data: From spreadsheets to databases to Structured Query Language (SQL) servers, explore any data
- Smart Dashboards: Combine multiple views of data for richer insight
Examples of Dash-Boarding for Procurement Performance
- Supplier Analysis in terms of compliance levels with Broad-Based Black Economic Empowerment (B-BBEE) and the Preferential Procurement Policy Framework Regulations (PPPFR)
- Payments to suppliers per designated categories
- Spend Analysis per region
- Spend Analysis per Standing Committee on Appropriations (SCOA) item
- Potential Irregular Expenditure;
- Conflict of interests and payments made in respect on such conflicts
- Deviations from Competitive Bidding (limited bids and existing contract expansions)
- IPS – e-procurement for quotations
- Commodity analysis
- Supplier participation rate
Snapshots of the Dashboard were shown in the slides. For example, in the first example slide, the total number of events for the period was 43 936. The status of the events for this period saw 28 369 events completed, 7 892 events cancelled, 7 645 events pending selection and 28 events open. 17% of Total events were still pending.
The graphic illustrated the reasons for cancellation and ranked them in order of importance in a bar graph:
- No suitable offers received
- Incorrect specifications
- Budgetary constraints
- No samples provided
- IPS not functional
- Validity of offers lapsing
The second example slide compared the relative proportions of Competitive Bidding vs Limited Bidding in a colourful pie chart
- Limited Bidding: 16.34%
- Competitive Formal Quo: 83.66%
The third example showed how the dashboarding system can analyse suppliers by their status on the WCSD and by the regions they supplied.
The fourth and fifth examples showed how the system illustrated procurement spending by B-BBEE category and PPPFR characteristics.
The sixth example set out a Spend Analysis per Region:
- City of Cape Town: R5 689 308 065.00
- Eden: R379 872 814.00
- Cape Winelands: R229 247 934.00
- West Coast: R174 038 509.00
- Overberg: R39 753 855.00
- Central Karoo: R14 547 005.00
- Total: R6 526 768 182.00
Spend Analysis per Region Percentage
- City of Cape Town: 86.35%
- Eden: 7.77%
- Cape Winelands: 3.55%
- West Coast: 1.37%
- Overberg: 0.58%
- Central Karoo: 0.37%
The indications of CSD and WCSD Supplier Spend per Province – 2018/19 (millions) were as follows.
- Western Cape: R6 526.77
- Gauteng: R3 338.76
- KwaZulu-Natal: R245.20
- Eastern Cape: R241.42
- Limpopo: R54.47
- Free State: R17.29
- Mpumalanga: R14.20
- North West: R3.25
- Northern Cape: R0.61
The data were represented in a bar chart and in a shaded map that graphically illustrated the large share of Western Cape government contracts that are awarded to companies in other provinces:
Mr A van der Westhuizen (DA) stated that he had previously served on the Portfolio Committee on Public Service and Administration. He knew that talks had been occurring for years to replace the Basic Accounting System (BAS) with an integrated system. He wanted to know to what extent the current systems in place by Treasury, would be able to quickly adapt to a new public administration spending software system.
Secondly, he recently posed a question to the Minister of Local Government on what he deemed would be an easy pricing situation to understand – he asked the Minister to provide a sample of ten municipalities and the price at which they bought 80 gram/m2 bond copy paper in the previous financial year. Unsurprisingly, he said, he found that from that sample of municipalities given, there was a pricing difference of 50% between municipalities that bought paper at the lowest price and those that bought it at the highest price. While it was important to support smaller enterprises, as more support meant more competition in the market which could compete and break down monopolies, an appreciation of value for money was imperative.
He said he had just come from the Mitchells Plain Train Station and as everyone knew, the railway system nationally had been hampered by supply chain management problems due to alleged corruption in that sphere. For example some of the security contracts had come to an end and supply chain systems had been halted which led to massive losses in other areas as a result of copper theft [because there was no now security]. He wanted to know to what extent Treasury could assist Provincial Departments when it came to procurement processes, and whether Treasury could offer a way in which to procure services within the Public Finance Management Act (PFMA), whilst staying within the Auditor-General’s guidelines.
Ms N Nkondlo (ANC) stated that whilst she appreciated the report, she found herself getting lost more often than not as the presentation was extremely technical. Furthermore, she hoped that Treasury would appreciate the fact that Committee Members were not necessarily data specialists. Their presentation needed to be toned down to avoid their audience getting lost in the process. This applied both to the Committee and to the public if they were to get a grasp of what is being explained. She brought to their attention that in the previous financial year, the theme of usage, usefulness and accuracy of information was highlighted by the Auditor-General – an issue which frequently arose when dealing with budgets in both provincial government departments as well as local government. She noted that Treasury had formulated interventions because of the need for data integrity. She wanted to know whether or not the interventions had worked and where they were in terms of scale.
She asked if Treasury was realising the idea of strategic sourcing. She explained that she had not received a satisfactory answer to one of her questions previously posed, especially from the Department of Public Works and Infrastructure. She wanted to know to what extent Treasury were utilising the budget to realise outcomes as they were depicting strategic sourcing within their presentation which related to value for money. Big contracting companies sometimes became so overwhelmed by the complexities of the equitable sourcing of inputs (which was required by the PPPFA) that they were falling flat. As a result, those companies were unable to do their jobs – she said this was reflected in various reports.
Ms Nkondlo stated that this overwhelming effect on companies led to companies being liquidated. This ultimately haunted the fiscus in the sense that many of those projects that had been worked on by the liquidated companies still needed to be completed or delivered. She asked to what extent the information by Treasury, such as the dashboarding and various other systems, influenced realistic decision-making. Deducing from the Auditor-General’s report it seemed that Treasury and the Auditor-General were contrasting one another – it seemed that there was still a long way to go and she wanted to know how long would it take Treasury to reach that particular point where Treasury and the Auditor-General were at agreement.
Referring to slide 10 (example 5), she emphasised her comments and experience was limited. But what is the experience of someone sitting in front of the dashboard or the information system who was exposed to the practical part of operations, as opposed to herself who was not? She wanted to know what the benchmark of the systems were, emphasising that mere numbers were not enough to draw an objective conclusion. Was it a drop in the ocean or was it at half or full utilization? She emphasised that whenever Treasury or anyone else presented figures, it needed to be done it such a way that would give a full circle of the information – against what percentage was it, was it a BEE company and where was the company located? Indicating these factors she said would help to conclude whether or not local procurement was being fully utilised.
Ms Ebrahim thanked the Committee for the questions. She stated that some of the questions raised were very close not only to her heart, but to that of Treasury as well. She explained that Treasury would not be changing the system and that there were no configuration changes on the system – so there was no technical system that was being involved or adapted. However, they focused on the improvement of input data. How do users of the system begin to have the necessary discipline and training and the capacity to input information correctly? For the supply chain, and even on the broader system, that was a huge focus in the Treasury.
She explained that the business intelligence reference was not to a system or thing that was created, it was something that was already there. When she spoke about Kitso, it was a kind of middleware interface, solution or technical IT tool that began to pull information in a manner that gave the layperson insight into understanding how the accounting requirements are on the BAS. A key focus was on the credibility aspect. Data correction was put in the front of the system so that where information was not imported correctly, the data correction would be able to correct it. It avoided someone having to manually change incorrectly imported data. That was the reason for her stating that the current system required no real configuration changes.
Mr Aphiwe Mazomba, Director: Financial Systems for the Western Cape Provincial Treasury, apologised for all the technical jargon. He explained that it was unfortunately the nature of the environment which they operated in. He explained that the issue around the integrated financial management system was something that had been coming for a long time. It had started as early as 2003 when the National Treasury came up with an assertion to essentially remove the BAS, LOGIS and Bastille systems [used across government] and to develop the integrated financial management system. This had still not landed, however, what they were doing within the Provincial Treasury was to work through a strategy to modernise the current systems which was an important stance to take. Having spent time with Chief Financial Officers (CFO’s) and departments it became clear that Provincial Treasury needed a strategy to essentially organise their systems.
What Ms Ebrahim had just presented was but one part of the strategy to modernise the current systems. Government departments essentially have access to those existing financial systems. The intention was to make use of the legacy systems whilst putting a technical layer on top which would essentially integrate the financial system with a newer interface which would assist government departments with various tasks.
Ms Ebrahim apologised that she had not included a slide which dealt with baseline in regard to the supply-chain information. However, she stated that she could explain with regard to example 10 that was before the Committee. [Only examples one to six were distributed to the public]. She explained example 10 was against slide 11, which would be the baseline, with 30% procurement companies which were BEE owned. In regard to the 30% subcontracted, that was the primary purchasing, that meant that without even subcontracting included, they were already achieving their targeted aim of empowerment which was 30% - 51% of purchases were from black owned companies. She explained that they used a scientific approach to subcontracting and in addition to that, they looked at an empowerment impact assessment tool, so both were considered in the procurement planning stage.
She explained that when you look at the broader sphere, there is less work for certain people because everybody is worrying about the bottom dollar. All people worry about being an effective contributor [to their households] and ultimately just having that earning capacity. Times are tough and people find themselves in difficult situations. She gave the example of companies that in the past would get contracts dealing with security within the province worth R120 million. Now they would receive contracts worth R60 million and would not be happy about that. Those conversations were difficult. This led the Treasury to look at the unit costs and the challenges that were on the system so they could improve it in the current e-Procurement system – as it related to the lower value procurement contracts. There was a need to evaluate the new entrants to the market and to question whether they were being set up for failure. How could Treasury have support programmes to try and create a sustainable environment? She said that there were a number of composite factors that needed to be considered. The programmes proved to be quite contentious as they worked in some instances and did not in others. Regarding value for money, she explained that she could honestly not speak as to the certainty of the achievement of targets currently. However, they were getting the kick from the system which they needed and what they’ve implemented thus far allowed them to reach a level of respect as a Treasury.
Moving along, Ms Ebrahim stated that quarterly information was made available to Departments. Treasury also checked for procurement planning, assessed the reports and engaged with the departments on a quarterly basis. She explained that Treasury and departments would partner regularly, moving away from Treasury being perceived as an oversight watchdog. This did not affect the level of respect for Treasury as an oversight body.
Regarding failure, she stated that they did not look at failure through a consideration only of irregular expenditure of fruitless and wasteful expenditure. The Treasury rather looked at the service delivery and performance. She explained that they needed to meet and work out a balance on what the real issues of non-compliance were, whilst discussing all options to prevent and balance out the previous wrongdoings. She stated that around the 4th of February, Treasury raised some concerns with the Auditor-General for the Treating Customers Fairly (TCF) framework in the national space and almost forced an engagement for a sitting, with an additional 30-40 page document submitted of all the issues, some of which were presented at a high a level to the Committee. She further stated that they had also captured some of the comments and issues that were in the audit reports of municipalities and departments. She said the Western Cape Provincial Treasury had got some issues correct, however, when they dealt with National Treasury, who had control over the nine provinces, it became very difficult – as a result they partnered up, in order to change some of the low hanging fruits that could fairly quickly be amended.
Ms Nkondlo said that currently there was a perception about government procurement systems being corrupt, labelling politicians as corrupt as a result of that. The Auditor-General was one such tool that enabled an ordinary person to understand or interpret whether a government was working or not. She explained that speaking as a politician, it was difficult to be sitting in an environment where her credibility was being impugned as a result of broader communication perspectives.
Mr van der Westhuizen said that security and the monitoring of security cameras not only required people on a long term basis but also required them to know where specific things such as cables were located in order to accurately monitor them. He recently felt that suppliers had let them down and found it difficult to justify using suppliers once they had let the departments down. He did not understand why suppliers were being used after being red flagged several times. Lastly, using the example of two people cooking the same food where one presents it in a beautiful way and the other does not, he wanted to know as to how those intangible differences were being considered.
The Chairperson sought clarity as to the manner in which coincidences within the system were being dealt with. She explained that some people believed that there were a remarkable concurrence of events which apparently puzzled the systems into making mistakes. The simple example was used of people being born on the same day with the same name and surname. The Chairperson wanted to know if there actually were coincidences in the system that was found and if so, was there a causal connection to the coincidences and what would be done about it.
Ms Ebrahim responded that in terms of the lead times of both committees, it was a real problem. She had just come from an engagement in the West Coast District and a number of Municipalities were unhappy about issues, to a point where it affected service delivery because procurement was not going by the committee and as a result would be rendered non-compliant by the Auditor-General. The issue of red flags was a number one priority when they had the engagement with the IT company yesterday. She explained that while they wanted to have further engagement on that issue today, the IT company was at Parliament giving feedback on performance.
The procurement pathway does not prohibit long term relationships simply because of the need to promote open competition. She said it was a tricky situation as section 33 required that it needed to go to council for approval, however, there was a court decision which said that it did not apply to procurement. They needed to review what it meant when the Member of the Executive Committee (MEC) did not need to approve an item, because it was still a commitment against the Labour Revenue Fund. It became more complicated in the fact that it meant, one could contract for a longer term but it would need to be looked at in perspective of s217 of the Constitution and the way in which the Constitution is written, along with the socio economic aspects of it. This is about creating the opportunity for more people to enter into the market and longer term contracts generally have the tendency to keep other companies out of opportunities. The Accounting Office operated within the auspices of the Promotion of Administrative Justice Act (PAJA), therefore the Accounting Office’s system was written within the context of PAJA. They dealt with how one would approach a market strategy and all of the things that influenced the decision making.
When looking at coincidences, Ms Ebrahim said it was about evidence based practice and they were pushing that model very well. When data mining was done and coincidences were picked up, it was both a positive and negative thing, because when one picked up coincidences – one would be able to tell whether it was a coincidence or not. It had happened before, but there was a proper thought process when coincidences were made.
Ms Ebrahim said that where a single company was dealing with something or delivering infrastructure for the last 15-20 years, it was a major red flag and related to other kinds of questions possibly being posed. However, those were being seen to on a case by case basis and the evidence, rationale and reasoning brought forward which the Accounting Officer would decide on. Red flagging was also done where poor performances were indicated.
Communication was a major issue. She agreed that the Ms Nkondlo was correct in saying that what the public needed was understanding in the context of a bigger picture. The public equated irregular expenditure with corruption, and the moment irregular expenditure was mentioned in an annual report, the media would report on it as corruption. She stated that communication needed to be done more responsibly.
Inequality Trends in South Africa: A Multi-Dimensional Diagnostic of Inequality Presentation by Provincial Treasury
Mr Fabian Daniels, Deputy Director: Budget for the Western Cape Provincial Treasury, briefed the SC on Inequality Trends in South Africa: A Multi-Dimensional Diagnostic of Inequality by Statistics South Africa (StatsSA).
StatsSA released the report on 14 November 2019. It was the first time that StatsSA released such a report. The report was a collaborative process between StatsSA in partnership with:
- The Southern African Labour and Development Research Unit (SALDRU),
- The Agence Francaise de Development (AFD) Group;
- The African Centre of Excellence for Inequality Research (ACEIR)
The primary data sources for the report were:
- StatsSA Income and Expenditure Survey (IES),
- Living Conditions Survey (LCS),
- General Household Survey (GHS),
- The Quarterly Labour Force Survey (QLFS)
Other Data Sources were: National Income Dynamics Study (NIDS) and Post -Apartheid Labour Market Series. [The presentation included graphs and tables to illustrate the commentary.]
Inequality in SA has long been recognised as one of the most salient features of the country which is consistently ranked as one of the most unequal countries in the world. In addition to being extremely high, SA inequality appears to be persistent. Despite many efforts by government to reduce inequality since 1994, progress has been limited. SA is fortunate amongst developing countries to have an abundance of nationally representative survey data on many different aspects of individual and household welfare; this enables StatsSA to conduct analyses on multiple dimensions of inequality; including income, employment, earnings, assets, social mobility, health, education, and access to basic services and infrastructure.
The purpose of the StatsSA Inequality Trends report is to provide a broad overview of these various dimensions in terms of inequality over the recent past, using the latest available survey data. The report further disaggregate estimates by population group, sex and/or geography. The results of the report present evidence on both vertical and horizontal inequalities in SA.
Inequality correlates with multiple measures of social problems; including health problems, mortality, crime and substance abuse. Psycho-social stressors that are heightened due to high levels of inequality lead to a systemic breakdown in the social structure. In addition to these direct effects on individual well-being, there are good reasons to be concerned about high levels of inequality when one is concerned about economic development. High levels of inequality mean that large segments of a society may be excluded from economic opportunities, thus limiting both those individual’s outcomes, as well as the aggregate performance of the economy. It reflects a loss to society of economic potential and productivity. The breakdown in social cohesion that can arise from inequality can directly affect the capacity of a government to effectively govern. Reducing inequality is therefore a critical task from a policy perspective.
Reducing inequality will require changes to the structure of the economy and the improvement in the quality of services government provides to ensure equal access and equal positive outcomes in terms of health and education across the population. On an economic front, job creation and inclusive economic growth remain vital to reducing poverty and inequality.
Per capita expenditure was used to measure economic inequality. The measures used to estimate inequality included the Gini coefficient, the Lorenz curve, Theil’s and Atkinson indices, and the Palma ratio. These measures assist with assessing trends in inequality over time, as well as the between-groups and within-group inequality levels in the country. Consistently across the money measures, a slight improvement in inequality, but from extremely high levels. Furthermore, while there was progress, it seems to have slowed down in recent years.
Throughout the years, income from the labour market has been the main source of household income in South Africa, accounting for over 70% of overall income. Additionally, labour market income is overwhelmingly the largest contributor to income inequality when compared to other income sources. Social grants and remittances have played a crucial role in reducing the income inequality gap between the bottom and top deciles over the years in South Africa.
Asset and Wealth Inequality
The more assets a household owns, the more likely that household will be better off compared to households with less assets. The graph on slide 12 shows that over time, the distribution of households shifted slightly to the right suggesting an overall increase in the number of assets owned by households in South Africa. A set of 18 selected assets and services was used to calculate an asset index. This approach allows for the estimation of Gini coefficients to measure asset inequality. The financial value of all assets owned by an individual or household is a measure of the wealth of that individual or household. In South Africa, wealth inequality is considerably higher than income inequality.
Labour Market Inequality
With a relatively stable absorption rate and increasing labour force participation rate, the ranks of unemployed people have increased considerably. 13.8 million members of the economically active population were unemployed in 2011. The number grew to 16.8 million by 2017, while the economically active population fell in the same period from 44.3 million to 40.2 million. Consequently, the unemployment rate has increased from an already high level of 24,8% in 2011 to 29.1% by Q4 of 2019. The labour market experiences of different population groups in South Africa continue to diverge substantially and still reflect the strongly persistent legacies of apartheid policies. Black Africans had the highest unemployment rates; which were between four and five times as high as they were amongst whites. Males have lower unemployment rates than females. The distribution of earnings starkly depicts the heavily racialised inequality in the South African labour market between 2011 and 2015. The labour market remains one of the key institutions through which South Africa’s exceptionally high levels of both vertical and horizontal inequality get transmitted.
Inequality in the Social Domain
The legacy of unequal development across the SA manifested in regional inequalities in terms of access to education, healthcare, and basic services (water, sanitation, refuse removal and electricity). Since 1994, government has tried to eliminate these inequalities with varying degrees of success. Generally, inequality in the social sphere has declined in some respects. High attendance levels in schools reflect the positive impact of SA’s progressive education system. Across the board, there have been notable improvements in school attendance, as well as access to textbooks, no fee schools and school nutrition programmes.
This contrasts sharply with health care where substantial differences remain, by race and province, in the use of public versus private health care facilities and in having access to a medical aid. The inequality gap between subgroups in accessing electricity has substantially narrowed over the years. Access to improved sanitation between rural and urban households narrowed between 2002 and 2017; however, this was not the case in terms of access to piped or tap water which remained flat. Between 2009 and 2017, access to internet connections in both urban and rural areas increased; although, households in rural areas were still lagging behind.
Mr van der Westhuizen stated that equality was a serious problem and that many countries were trying to address that. Referring to the collapse of Steinhoff, he explained that no poor person benefitted from it and therefore, he warned not to only look at inequality but to look at the income levels of the poor. He stated that he believed that the graphs which depicted households assets were of vital importance. He posed the question as to whether or not he was right in saying that unemployment was the biggest contributor to inequality in South Africa.
Secondly, he wanted to know whether or not he was correct in saying that with reference to the Gross Domestic Product (GDP) in Gauteng and the Western Cape, there was an improvement of 0.4 percentage points from 2009-2015. He also wanted to know as to the reason behind this improvement when comparing it to the decline by other provinces.
Ms Nkondlo said that in future when the Committee considered StatsSA information and reports it would only be fitting that as an agent of the State they be present to explain the methodology behind their findings. It did not seem appropriate to allow Treasury to answer questions that were not part of their scope. She further wanted to know as to what drove the particular phenomenon of the increase by the Western Cape and Gauteng GDP between 2009-2015.
Regarding the labour market income salary vs social grants, she wanted to know whether or not she was correct in her interpretation being that labour markets were the biggest contributor to inequality in South Africa.
Mr Daniels responded that the economy was in actual fact the driver for income inequality, he explained that the Gini coefficient was a measure that linked income and the population; and the distribution of income across the population. He once again emphasised that what drives the ‘chop’ is the economic growth.
He further elaborated, that the since 2009 (the recession), South Africa’s economy has not grown more than one percent each year in terms of income per capita. GDP per capita has been decreasing for the past six to seven years, so while there is a slight growth, it would not qualify as sustainable growth.
The nominal value amount [of GDP] seemed to be getting bigger. Inflation is added to that amount, which continues to increase the nominal value by population, however, inflation is eroding the value of the money – making the economy the driver for inequality.
The Chairperson stated that the Committee had gone over the prescribed time and thanked the delegation for attending the meeting, beyond the allocated time frame. The Chairperson thanked all Members and the member from PMG for their attendance.
The meeting was adjourned.
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