Questions and Replies

Filter by year

22 March 2024 - NW320

Profile picture: George, Dr DT

George, Dr DT to ask the Minister of Finance

(1)Whether, in light of the statement on the Government’s official news site regarding the participation of the Republic in the 54th Annual Meeting of the World Economic Forum (WEF) 2024 that took place in Davos-Klosters, Switzerland, from 15 to 19 January 2024, which detailed the delegation’s productive engagements, he will furnish Dr D T George with a breakdown of the total costs incurred by the delegation for the trip to the WEF 2024, with particular reference to the expenses relating to (a) accommodation, (b) air travel, (c) ground transportation, (d) entertainment and (e) any other ancillary expenses; (2) whether the National Treasury was responsible for covering the costs of the entire delegation’s expenses; if so, what are the relevant details; if not, (3) whether the costs were covered from the budget allocated for his expenditures as Minister; if not, what is the position in this regard; if so, what are the relevant details? NW363E

Reply:

(1)

(a)

Accommodation

(b)

Air Travel

(c)

Ground transportation

(d) Entertainment

(e)

Other ancillary expenses

R838 576,58

R325 238,64

R260 014,26

-

R125 258,00

(2) National Treasury covered the cost of the department’s delegation only.

(3) The costs were covered from the budget of the Minister and the International and Regional Economic Policy Division.

22 March 2024 - NW266

Profile picture: Singh, Mr N

Singh, Mr N to ask the Minister of Finance

(1)Whether, considering that during his reply to the debate on the State of the Nation Address, the President of the Republic, Mr M C Ramaphosa, indicated that unspent funds by municipalities is something that should not be tolerated, and noting that the financial year-end of departments and municipalities do not coincide, he has found that there is a level of fiscal dumping by national departments onto local governments which gives them only three months to spend their money; if not, what is the position in this regard; if so, (2) whether he will consider motivating the financial year-end of all spheres of government to be the same; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

1. National Treasury (NT) during the many forums, intergovernmental forums and consultation processes always caution organs of state against fiscal dumping. Fiscal dumping is perceived when sector departments (transferring officers), that administrate and monitor municipal performance, transfer huge amounts of money during the last month of the national financial year (March). However, it should be noted that in terms of the division of nationally raised revenue that appropriates money through the Division of Revenue Act (DoRA), NT is of the view that the national departments are unable to ‘dump’ funding to municipalities because all transfers to municipalities are made in terms of the approved payment schedule and follow a project plan.

Municipalities also implement in-year budget adjustments changes in the last month of the national financial year, between January and March annually which is another process that may also appear to imply fiscal dumping of the funds to the local government sphere.

Additionally, NT conducts another process in terms of section 18 of the DoRA which is a mid-year process of assessing progress of municipalities in terms of their DoRA allocated funds. This process is undertaken during the middle of the municipal financial year, 31 December annually. The implication of this process is that should funds against slow moving municipalities be stopped in terms of section 18 of DoRA and be reallocated to fast moving municipalities in terms of section 19 of DoRA, the recipient municipalities would receive additional funding during the last month (March) of the national financial year, allowing a municipality three months to spend the additional amounts.

2. NT is not considering motivating the financial year-end of all spheres of government to be at the same time.

The national / provincial budget process involves managing the following simultaneously: the Medium-Term Strategic Framework (MTSF), the medium-term fiscal framework, the division of revenue process, and the budget processes of national government and the nine provincial governments.

The separation of national / provincial financial years from the local government financial years allows for a proper sequencing of the national / provincial and the local government processes. The MTSF, the fiscal framework, the division of revenue and the national and provincial conditional transfers to local government are all in place and certain by mid-February which is when municipalities begin compiling their budgets. This means that municipalities can compile their budgets with accurate awareness of what resources they will be receiving from the equitable share and in the form of national and provincial conditional transfers.

From the municipal perspective, the alignment of the municipal financial year with the national and provincial financial year will:

a) place enormous pressure on municipalities already strained financial management capacity.

b) impact negatively on the quality of municipal budgets, as they will not have access to the final equitable share and conditional transfer numbers until right at the end of the process.

c) undermine the community consultation and participation processes around municipal budgets, as they would have to happen during the same period while the national and provincial budgets are being compiled and changed; and

d) undermine the scope for effective coordination of national, provincial and local government planning, as the municipalities would be required to develop and revise their integrated development plans, at the same time the national and provincial departments are still doing their own planning.

The net result would be to condense coordination of national, provincial and local government planning which would inevitably result in gaps and weaker spending outcomes, particularly in relation to conditional grants and will generally impact negatively on the move towards improved planning and execution.

A further key factor to consider is the ability of the Office of the Auditor-General to audit all national departments and their entities, all provincial departments and their entities, municipalities and their entities, within two months after the end of the financial year. The current staggering of financial years means the work is spread over a four-month period and there are sufficient auditors to meet the requirements.

22 March 2024 - NW299

Profile picture: Lees, Mr RA

Lees, Mr RA to ask the Minister of Finance

(1)Whether, with reference to National Treasury’s presentation to the Standing Committee on Appropriations on 14 February 2024, has Takatso Consortium provided proof of funds for the Strategic Equity Partnership transaction; if not, why not; if so, what are the relevant details of such proof of funds; (2) whether National Treasury conducted a review of the Strategic Equity Partnership between Takatso Consortium and SA Airways (SAA); if not, why not; if so, will (a) the partnership give rise to any future fiscal obligations for the State, (b) he furnish Mr R A Lees with a copy of the agreement and (c) on what date does he envisage doing so; (3) whether the National Treasury will obtain a fair payment for the 51% of the SAA shares to be sold to the Takatso Consortium; if not, why not; if so, what are the relevant details; (4) what are the relevant details of non-core assets that SAA has disposed of since entering business rescue on 5 December 2019?

Reply:

1. No correspondence has been received by the National Treasury relating to the Sale and Purchase Agreement and the proof of funds necessary for the Strategic Equity Partnership transaction.

2. National Treasury did not conduct a review of the Strategic Equity Partnership transaction as it was not subject to section 54(2) of the PFMA. Once the Sale and Purchase Agreement is received by the National Treasury, it will be reviewed to determine whether it poses risk to the fiscus through fiscal obligations.

3. No details have been received by National Treasury on the compensation to be received by government for the sale of the majority shareholding to the Takatso Consortium. The details are contained in the Sale and Purchase Agreement which National Treasury was not involved in the negotiation thereof. National Treasury currently has no details related to the sale other than what has been made publicly available by the Department of Public Enterprises.

4. SAA submitted PFMA section 54 applications for the disposal of wide-body aircraft and non-core property that formed part of the old Durban International Airport. The Minister of Finance has approved both transactions.

08 March 2024 - NW158

Profile picture: Graham, Ms SJ

Graham, Ms SJ to ask the Minister of Finance

(1)Whether the Pension Redress Programme by Government Employees Pension Fund is still ongoing; if not, why not; if so, what is the total number of applications that (a) were received to date, (b) have been finalised and (c) remain to be finalised; (2) whether he will furnish Ms S J Graham with the latest update on the application of Ms Sheila Cathleen Lewis [details furnished]?

Reply:

The Pension Redress Programme was an initiative negotiated and agreed to by parties to the Public Service Coordinating Bargaining Council (PSCBC) through Resolution 7 of 1998. The programme aimed to address discriminatory practices by recognising non-contributory service as pensionable service for employees affected by past discrimination. The programme's implementation period started on 29 November 2002 and concluded on 31 July 2012, following PSCBC Resolution 3 of 2012, which set the final application deadline as 31 March 2012. The resolution of the programme was further defined under PSCBC Resolution 2 of 2018, which detailed the compensation methodology and marked the formal conclusion of the redress process for qualifying applicants.

Applications for the redress programme were submitted via the PSCBC. The Government Employees Pension Fund (GEPF) acted as the payment facilitator for the redress payouts but was not the initiating body of the programme. The decisions regarding the programme's commencement, operational framework, and conclusion were determined within the PSCBC framework, with the Government Pension Administration Agency (GPAA) responsible for processing applications and implementing payments. As such, the GEPF would not be able to comment on the reasons for the programme's conclusion beyond the PSCBC resolutions.

a) Applications received to date

The PSCBC received a total of 150,444 applications of which 72 335 applications were identified as qualifying for the redress benefit. An independent audit was conducted to ensure the verification process was complete, fair, and accurate. This process involved a detailed review to distinguish between qualifying applicants, error cases, and those not meeting the eligibility criteria. Following the completion of the audit process, 53,717 records were identified as qualifying applicants and 18,618 error cases were noted.

As part of the implementation process, the GPAA undertook a meticulous re-verification of cases against the resolutions and pensionable periods recorded on the administration system. This was to ensure the utmost accuracy and fairness in the redress allocation. This re-verification process led to various outcomes, including:

  • Error cases initially identified that later met the qualifications for approval;
  • Approved/Error cases that, upon re-verification, did not qualify due to overlapping pensionable service;

As a result of this thorough process, the total number of approved cases was updated to 58,324, with the initial 17,045 error cases undergoing further review. Hence a total of 75 369 applications have been processed to date.

b) Applications that have been finalised

Of the initially approved cases, 58,123 applications have been finalised and processed for redress. Of the error cases revisited, 5,982 (35%) were reclassified from error to approved, 6,348 (37%) remained as error cases, and 4,715 (28%) were determined not to qualify (DNQ), hence a total of 68 820 have been finalised.

c) Remain to be finalised;

As we continue to work towards the finalisation of the Pension Redress Programme, a small fraction of cases remains outstanding. Specifically, of the approved cases, 201 remain unresolved. Additionally, 6,348 cases have not been resolved due to their initial classification as error cases. A targeted approach has been implemented to address these error cases, involving the redistribution of error letters by the GPAA to facilitate departmental engagements and case resolutions.

Moreover, there are a small number of members who, despite applying within the stipulated timeframe, were not included in the final costing of the Redress Programme. These cases, while few, are being carefully reviewed, and are addressed on a case-by-case basis.

The GEPF is committed to concluding these remaining cases with diligence and fairness, ensuring every eligible member receives due redress.

08 March 2024 - NW334

Profile picture: De Villiers, Mr JN

De Villiers, Mr JN to ask the Minister of Finance

What are the full details of all (a) sponsorships, (b) donations and (c) financial transfers provided for lawfare and/or any other purposes to (i) him, (ii) the National Treasury and (iii) officials of the National Treasury by any (aa) Qatari, (bb) Iranian and/or (cc) Russian organ of state, organisation and/or resident since 1 January 2021 up to the latest date in 2024 for which information is available?

Reply:

 

(i)

Minister of Finance

(ii)

National Treasury

(iii)

National Treasury Officials

(a) Sponsorships

None

None

None

(b) Donations

     

(c) Financial transfers

     

(aa) Qatari

None

None

None

(bb) Iranian

     

(cc) Russian organ of state, organisation and/or resident

     

08 March 2024 - NW298

Profile picture: Lees, Mr RA

Lees, Mr RA to ask the Minister of Finance

(1)Whether, with reference to National Treasury’s presentation to the Standing Committee on Appropriations on 14 February 2024, the R10,5 billion and R1,0 billion funds that were allocated to SA Airways (SAA) were used for purposes other than settling outstanding business rescue obligations; if so, what are the relevant details; (2) whether all government guarantees to SAA have been cancelled; if not, what is the position in this regard; if so, what are the relevant details; (3) whether SAA has been submitting monthly updates to the National Treasury, including, inter alia, forecast cash flows, revenue generation, profit and loss statements, and statements of financial position; if not, why not; if so, will he furnish Mr R A Lees with all the records of such updates up to 31 January 2024?

Reply:

1. The funding allocated to SAA was utilised to settle the obligations that arose from the business rescue processes. The settlement of the business rescue obligations is expected to be settled over several years.

2. One of the conditions attached to the funding provided to SAA was that government guarantees available to the airline would be reduced by the equivalent quantum. At present SAA does not have available government guarantees against which they can raise debt or other obligations. However, there is still a government guarantee exposure amounting to R91.5 million related to Unflown Ticket Liabilities and Letters of Credit. The airline is currently engaged in negotiations with lenders to provide a cash deposit in lieu of the guarantee. Once negotiations with lenders have been completed, these guarantees will then be cancelled, and government will therefore no longer have contingent liability exposure related to SAA.

3. SAA has and continues to submit monthly updates to National Treasury (NT) and the Department of Public Enterprises (DPE). Moreover, a Guarantee Monitoring Task Team comprising officials from the NT, DPE as well as SAA management meets monthly to discuss amongst other issues financial performance and forecasts, financial position and other developments. DPE, as convenors and secretariat of the monthly monitoring meeting and shareholder will be best placed to provide the monthly records.

08 March 2024 - NW113

Profile picture: Krumbock, Mr GR

Krumbock, Mr GR to ask the Minister of Finance

Whether any guests travelling aboard an aircraft returning to South Africa from any state visit to the State of Qatar in 2023 made any foreign currency declarations on their return from those meetings; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

The provision of Section 15(1)(a) and (b) of the Customs and Excise Act, 1964, respectively provides that any person entering or leaving the Republic must declare all goods (including goods of another person) upon his person or in his possession on entering the Republic or before leaving the Republic. Goods according to Customs and Excise Act includes currency.

Noting the request from parliament, Section 4(3) Customs and Excise Act, 1964, prohibits the Commissioner and/or SARS officials from disclosing any information relating to any person, firm or business acquired in the performance of SARS duties. Accordingly, SARS is not able to disclose information requested to the Minister and Parliament.

08 March 2024 - NW201

Profile picture: Montwedi, Mr Mk

Montwedi, Mr Mk to ask the Minister of Finance

What total number of (a) companies are currently registered for value-added tax (VAT), (b) the registered companies received their VAT refund and got any audit finalised within 21 days and (c)(i) companies did not get their cases resolved within 21 days and as a result did not get their refunds and (ii) what was the cause for that?

Reply:

a) The VAT register has 951 716 Active VAT Vendors as at 16 February 2024. VAT vendors include Companies, Individuals, Trusts and other entities such as welfare organisations, municipalities etc. The below information therefore pertains to all VAT vendors.

b) 448 117 VAT refunds have been paid between 1 April 2023 and 16 February 2024. Of the 448 117 VAT Refunds paid, 336 608 (75.71%) were paid within 21 days. 128 513 VAT Refunds were stopped for verification. Of the 128 513 VAT Refunds that were stopped for verification, 55 373 were resolved and paid out within 21 days.

c) (i) Of the 128 513 VAT Refunds that were stopped for verification, 73 140 VAT Refunds were paid in more than 21 days.

(ii) There are many reasons that cause the delay of refund payments. The delays emanate from SARS as well as taxpayers. On the SARS side, these include amongst others, increased instances of impermissible VAT refund claims that put additional strain on SARS’ already constrained capacity. National Treasury has made funding available to SARS to secure additional temporary resources with effect from December 2023. Improvements in the finalisation of verifications are therefore being realised.

On the side of taxpayers, qualifying VAT refunds are not processed due to amongst others invalid banking details provided by taxpayers and outstanding returns. In the latter instance, the relevant provisions contained in the Value-Added Tax Act (No. 89 of 1991) read together with the Tax Administration Act (No.28 of 2011) provide for the withholding of refunds until such time that the vendor has submitted all outstanding returns.

SARS continues to engage taxpayers in these instances to attend to these issues.

06 March 2024 - NW159

Profile picture: Joseph, Mr D

Joseph, Mr D to ask the Minister of Finance

What are the reasons that the late Mrs Gertrude Malouw [details furnished], who passed away on 10 October 2013, is still receiving final letters of demand from the SA Revenue Service for an outstanding amount of R2 500,00?

Reply:

Without getting into taxpayer confidential information as prescribed in Chapter 6 of the tax administration act, in a scenario where a taxpayer passes on, a family member or Executor of the deceased estate would normally inform relevant parties including SARS of the death of the taxpayer so that the matter may be coded accordingly as deceased. This includes publishing the death notice on the Government Gazette.

Where SARS does not have a record indicating that a matter is an estate, such a matter is treated as active and the debt is pursued consistently until it is paid or a payment arrangement is made. SARS would like to encourage executors of the estates and family members of the deceased, to inform SARS as soon as possible once the family member passes on. This will allow SARS to immediately change the status from an “active” taxpayer to an “Estate Late” status. This will stop all future returns and allow the Executor to finalise the final return of the Estate to ensure that all outstanding tax returns, to the date of death, are filed and that applicable tax amounts are dealt with appropriately to have the estate account wound up accordingly.

SARS is currently working on a project to automate the coding of estates through the use of third party data, but this will take time.

06 March 2024 - NW16

Profile picture: Buthelezi, Ms SA

Buthelezi, Ms SA to ask the Minister of Finance

Considering that the debt owed to municipalities by government departments is at the core of the financial challenges faced by municipalities, what are the full, relevant details of (a) an overview of the municipal debt of each government department and (b) how the National Treasury intends to address the debt issue?

Reply:

a) The high-level analysis of municipal debt for each government department as per MFMA S71 report for the financial period ending 31 December 2023 shows a total outstanding debt of R22 065 billion.

b) An additional breakdown of the total outstanding debt can be summarised as follows:

Total National Departments R8 015 billion

Total Provincial Departments R9 756 billion

Other entities and institutions R4 294 billion

Further details of the actual outstanding debt per department, entity or institution are depicted in Table 1 which is attached (Debtors Age Analysis for Organs of State).

c) National Treasury (NT) has encouraged municipalities to enforce its credit control and debt management policies and bylaws. This implies that if any organ of state neglects to honour their payment arrangement for services rendered by municipalities within the legislative timeframe of 30 days as per the PFMA and MFMA, the municipal, by law, must proceed to terminate or restrict the services to those customers (including government departments and businesses) with immediate effect.

Even if the customer questions the accuracy of the bill issued by municipalities, which may be a valid concern, it is not acceptable not to honour the payment for services that were consumed. In some cases, dependent on the specific credit control and debt management policy, the customer may have to pay first before any dispute is resolved.

In addition, the National Treasury have implemented various legislative mechanisms which are complemented by specific MFMA circulars, particularly those related to budgeting and debt, to guide municipalities towards financial stability and efficiency and applying debtors’ management and collection to all the customers including organ of state debt correctly.

Currently the National Treasury initiatives include smart solutions to enhance consumption accuracy by enabling precise tracking and billing; optimizing revenue collection; and ensuring fair charges for actual usage.

 

Annexure A

(Table 1: Debtors Age Analysis for Organs of State)

06 March 2024 - NW92

Profile picture: Powell, Ms EL

Powell, Ms EL to ask the Minister of Finance

(a) On which date were funds deposited by the United Arab Emirates (UAE) into a South African bank account for Sudanese leaders prior to the meeting of the President of the Republic, Mr M C Ramaphosa, with Mohamed Hamdan Dagalo, leader of Sudan's Rapid Support Forces, (b) which other organisations involved in wars across Africa have been similarly assisted and (c) was this one of the reasons that South Africa was grey-listed by the ratings agencies?

Reply:

a) As the Honourable member would be aware, the Minister of Finance does not have sight of transactions that are facilitated by banks on behalf of their clients. The role of the Minister of Finance, with regard to the operation of banks, is limited to formulating financial regulatory policy.

b) Please refer to (a) above.

c) Government has provided the reasons for South Africa being greylisted through public statements by National Treasury at the time (e.g. statement issued by National Treasury dated 24 February 2023[1], and related frequently asked questions, and responses to the many parliamentary questions, for e.g., Nos PQ943, PQ3967, PQ2641, PQ2642, NW1730E, and a question for oral response for the Deputy President CO254E). The country was greylisted, due to deficiencies on the extent to which the country complied with the 40 Financial Action Task Force (FATF) recommendations and 11 effectiveness outcome measures, as assessed through a Mutual Evaluation process that was conducted by the FATF between 2019-2021.

  1. https://www.treasury.gov.za/comm_media/press/2023/2023022401%20Media%20statement%20-%20Response%20to%20FATF.pdf

02 January 2024 - NW3726

Profile picture: Komane, Ms RN

Komane, Ms RN to ask the Minister of Finance

Considering that the Portfolio Committee on Public Service and Administration paid an oversight visit to the (a) Northern Cape and (b) Free State in May 2023, where it identified the common challenge to be that the State lacked internal capacity as most reports were not showing alignment between the budget and procurement plans, what steps has the National Treasury taken to date to address the specified issue of misalignment between budget and procurement?

Reply:

Section 27(3) of the Public Finance Management Act (PFMA) states that an annual budget must be in accordance with a format prescribed by the National Treasury. The Medium-Term Expenditure Framework (MTEF) Technical Guidelines 2024 for provinces were issued in June 2023 to make such prescriptions, provide government departments, as well as provincial public entities, with guidance on how to prepare their medium-term estimates for the 2024 Budget and to promote alignment between the budget and procurement plans.

As part of these guidelines, infrastructure projects and programmes must be undertaken following the Infrastructure Delivery Management System (IDMS) supported by the Framework of Infrastructure Delivery and Procurement Management (FIDPM). Infrastructure (User) Asset Management Plan (IMAP/U-MAP) must be prepared and updated annually outlining the asset activities and resources required. The plan must include a list of programmes and projects for a minimum period of five years. To promote alignment between the budget and procurement plans, the IAMP/UAMP must inform the development of the Infrastructure Programme Management Plan (IPMP) and Infrastructure Procurement Strategy (IPS) which specifies what the department intends to achieve in the next 3 years of implementation of projects/programmes.

In May 2023, the National Treasury also published a Guideline on Budget Submissions for Large Strategic Infrastructure Proposals. This guideline invites submissions from public institutions in respect of large infrastructure projects and/or programmes that require budget support over the 2024 MTEF. To promote alignment between the budget and procurement plans, each proposal should include a procurement strategy that details the selected packaging, contracting, pricing and targeting options for all the required goods and services or a combination thereof as well as the procurement procedure to ensure alignment to Constitutional requirements and other legislative requirements. Furthermore, all proposals that require direct budget support over the 2024 MTEF must be shovel ready – in other words, they should be ready for immediate procurement, contracting and construction.

22 December 2023 - NW4133

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

Whether he will furnish Mr M Manyi with a robust overview of the specific consultative measures he had with the SA Reserve Bank (SARB) to ensure that the SARB is fully aligned with its constitutional duty, particularly in light of recent developments suggesting vulnerabilities to manipulation through price-fixing and market allocation; if not, why not; if so, what are the relevant details of the concrete consultative measures or steps being taken to (a) fortify the regulatory framework and (b) pre-empt any future lapses in fulfilling the critical mandate?

Reply:

It is not clear to the Minister of Finance what specific consultative measures the Honourable member refers to. As enshrined in section 224(2) of the Constitution, the operational independence and autonomy of the South African Reserve Bank are constitutionally guaranteed. The Minister of Finance and the Governor of the South African Reserve Bank regularly interact so as to ensure the alignment of fiscal and monetary policy.

Whilst there is constant collaboration between the Minister of Finance and the South African Reserve Bank, the investigation into allegations of uncompetitive practices by banks was conducted by the Competition Commission, with neither the Minister of Finance nor the South African Reserve Bank taking part in it.

22 December 2023 - NW4122

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

With reference to his speech during the tabling of the Medium-Term Budget Policy Statement on 26 October 2022, wherein he projected that the average economic growth would be 1,6% and would not be enough to support the developmental goals of the Republic and as a result structural reforms will be implemented, what are the full details of the (a) form of the specified structural reforms, (b) projected growth and results that his department envisages in the different sectors and (c) promotional and supportive assistance and/or investment that his department will offer (i) small, medium and micro enterprises, (ii) the agricultural sector and (iii) township and informal economies to ensure sustainability and that their growth is not stifled?

Reply:

(a) The Economic Recovery and Reconstruction Plan (ERRP) outlines the country’s near-term growth agenda. It includes a number of structural reforms aimed at supporting the economic recovery by unlocking investment and removing barriers to growth.

(b) The National Treasury provides forecasts from the expenditure side of GDP, details of which can be found in the Budget Review 2022 and Medium Term Budget Policy Statement (MTBPS) 2022.

With regard to the estimated impact of reform implementation, this was estimated to result in a 2.3 percentage point growth above the baseline over the next ten years. The details of this work can be found in the Economic Recovery and Reconstruction Plan.

(c) The MTBPS does not make specific allocations to departments and programmes. Such allocations will be published in the 2013 Budget.

22 December 2023 - NW3994

Profile picture: George, Dr DT

George, Dr DT to ask the Minister of Finance

In view of the compelling argument for instituting a debt rule that sets a clear target for the national debt as a percentage of Gross Domestic Product (GDP), what (a) are the reasons that the National Treasury has not acted on the growing concern that the current expenditure rule has failed to halt the deterioration of our debt-to-GDP ratio and (b) measures will the National Treasury that will manage and control the rising national debt effectively?

Reply:

a) The ceiling on main budget non-interest expenditure was introduced in 2012 to anchor fiscal policy. However, budget deficits and debt have continued to grow, in part because the ceiling was not binding. The target of reducing and stabilising debt has been persistently shifted out, largely because of lower‐than‐expected economic and revenue growth, and large spending pressures such as state‐owned company bailouts and compensation costs. As a result, main budget expenditure has remained relatively high at over 29 per cent of GDP over the past two years. This has led government to consider additional rules to provide an anchor for fiscal sustainability. Further details will be provided in the 2024 Budget.

b) Over the medium term, government will support the economy, stabilise the public finances and protect the social wage. In the context of persistently low economic growth, government’s fiscal strategy remains focused on consolidating the public finances to narrow the budget deficit, stabilise public debt and ensure fiscal sustainability. Fiscal policy will pursue a balanced approach that includes spending restraint, revenue measures and additional borrowing. Tax measures to raise additional revenue of R15 billion in 2024/25 will be proposed in the 2024 Budget. Relative to the 2023 Budget estimates, proposed reductions to main budget non-interest spending mainly baselines and provisional allocations and changes in reserves amount to R33.1 billion in 2023/24 and R213.3 billion over the next two years. On a net basis, non‐interest expenditure will decrease by R3.7 billion in 2023/24 and R85 billion over the next two years. Compared with the 2023 Budget, the main budget deficit increased by R54.7 billion in 2023/24, R51.8 billion in 2024/25 and R66.7 billion in 2025/26. The gross borrowing requirement for 2023/24 has increased from R515.6 billion to R563.6 billion, relative to the 2023 Budget. Gross loan debt is projected to stabilise at 77.7 per cent of GDP in 2025/26. And government will propose new fiscal anchors to ensure a sustainable long‐term path for the public finances.

22 December 2023 - NW3403

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

In light of the fact that the Auditor-General has reported a 31% shortfall in terms of upgrading unqualified audit outcomes into clean audit in the National Treasury and all 16 entities that report to him, what actions has he put in place to achieve 100% clean audit in (a) the National Treasury and (b) all the entities that report to him?

Reply:

1. NATIONAL TREASURY

The department has developed an audit action plan to address audit findings and improve on the quality of reporting on both the financial statements and performance information. The audit action plan will be presented quarterly to the NT Audit Steering Committee, where the responsible officials identified as per the action plan will be invited to provide progress updates on the proposed action plan.

The monitoring of the audit action plan will be facilitated by Internal Audit, wherein they will engage with the respective responsible officials on the inputs for the action plans to be implemented as well as monitoring the effectiveness of the corrective measures.

Continuous improvements on the effectiveness of the Internal Control through frequent assessment and enhancement of current controls to detect and prevent any deficiencies that may potentially hamper the department to achieving a clean audit. These includes amongst others the strengthening controls on the effectiveness of:

  • Contract Management review processes to detect and prevent any possible Unauthorised, Fruitless & Wasteful, and Irregular Expenditure;
  • Proactively engaging relevant stakeholders such as Office of the Accountant General, Internal Control and Audit Steering Committee on significant extra ordinary transactions that pose a potential for material misstatements i.e. Land Bank and ESKOM; and
  • Identifying high risks areas coming from prior year audit to initiate early engagements and discussions to prevent the reoccurrence of material findings.

Of the 11 entities reporting to the Minister of Finance, 6 entities received an unqualified audit opinion, while 5 received an unqualified audit opinion with emphasis of matters.

2. ACCOUNTING STANDARDS BOARD (ASB)

We have only ever received unqualified (“clean”) audits since the inception of the ASB in 2002. This includes the audit for the financial year ended 31 March 2023.

3. CO-OPERATIVE BANKS DEVELOPMENT AGENCY (CBDA)

The CBDA is a relatively small entity without its own internal audit function. The CBDA appointed a service provider to perform qualify reviews during the 2022/23 annual financial statements. This measure resulted in an unqualified audit outcome with no material misstatement for the 2022/23 annual financial statements.

Five of the findings on material misstatements of the 2022/23 annual financial statements were resolved and one, relating to non-compliance with legislation, was resolved. The only outstanding finding relates to consequence management, which is in progress. The Acting Managing Director, after his re-appointment in July 2023, has now concluded the remaining consequence management matters and has sent it to NT Internal Audit for due diligence, as requested by the CBDA Audit Committee. All consequence management issues will be finalised during this financial year.

Yet again, a service provider has been appointed to perform qualify reviews for the 2023/24 annual financial statements.

The AMD is confident that the measures put in place will achieve a 100% clean audit for the 2023/24 financial year.

4. DEVELOPMENT BANK OF SOUTHERN AFRICA (DBSA)

N/A - DBSA achieved a clean audit.

5. FAIS OMBUD

We confirm that the FAIS Ombud Office achieved a clean audit for the 2022/23 financial year and will continue to strive to achieve it.

6. FINANCIAL INTELLIGENCE CENTRE (FIC)

The Financial Intelligence Centre (FIC) has achieved a clean audit in its 2022/23 financial year. The FIC will continue on this trajectory of rigorous financial management in the current financial year.

7. FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)

The Financial Sector Conduct Authority (FSCA) has adopted a comprehensive approach to maintain a clean audit status from the Auditor-General of South Africa (AGSA). Its commitment to financial prudence, transparency and accountability drives its efforts to ensure that Annual Financial Statements (AFS) are free from material misstatements, whether due to fraud or error and the Annual Performance Report (APR) meets the highest standards of accuracy and compliance. The following are the key measures the FSCA has put in place to maintain a clean audit status:

1. Annual Financial Statements

A dedicated team of qualified and experienced personnel is responsible for preparing the AFS. They ensure strict compliance with relevant accounting standards, the Public Finance Management Act (PFMA) and other applicable legislation. The Executive Committee (EXCO), Strategic Management Committee (SMC), Audit and Risk Committees provide oversight of the FSCA’s monthly, quarterly and annual financial reporting.

2. Irregular, Fruitless and Wasteful Expenditure

To prevent irregular or wasteful expenditure, the FSCA has implemented a rigorous multi-level approval process and established a system of internal controls. These measures ensure that all financial transactions align with organisational goals and adhere to FSCA internal policies and applicable legislation.

3. Predetermined Objectives

The FSCA’s Monitoring and Evaluation unit reviews quarterly reports and verifies the submissions against each division’s portfolio of evidence to ensure that all reports accurately reflect the performance against the predetermined objectives laid out in the Annual Performance Plan.

4. Procurement and Contract Management

The FSCA procurement decisions benefit from the expertise of supply chain professionals and the counsel of the Head of Office of General Counsel, who advise the Bid Adjudication Committee on the legal aspects of all procurement decisions.

5. Compliance with Key Legislation

The compliance unit continuously monitors the FSCA’s adherence to relevant policies, legislation governing financial matters, including the PFMA and other applicable legislation.

6. Effective Internal Control Systems

The internal audit function overseen by the Audit Committee reviews internal controls annually in alignment with the FSCA's risk profile. The audit annual plan incorporates a pre-assessment of financial and performance reporting. Additionally, all findings raised from audits, if there are any, are recorded in the audit tracker and implementation of controls as per the audit recommendations, are monitored on a monthly basis. The Governance, Risk and Assurance department conducts a thorough annual risk assessment to identify potential risks related to financial and performance reporting and takes steps to mitigate them. Regular training is provided to personnel responsible for financial and performance reporting to ensure that reports produced are in accordance with applicable laws and regulations.

7. Governance

The FSCA has four governance committees in place authorised to provide oversight and make recommendations to EXCO. These are the Remuneration, Risk, Audit, and Social and Ethics Committees. These committees have approved terms of reference that outline the purpose, scope, and operational rules for each committee. All committees have annual evaluation processes in place to measure the effectiveness of each committee.

Through these measures, the FSCA is dedicated to achieving and maintaining a clean audit status, demonstrating a commitment to uphold the highest standards of financial integrity, transparency and accountability.

8. GOVERNMENT EMPLOYEES PENSION FUND (GEPF)

The GEPF has received unqualified audit outcomes for 26 consecutive years from 1998 to 2023.

9. GOVERNMENT PENSIONS ADMINISTRATION AGENCY (GPAA)

The Government Pensions Administration Agency (GPAA) has historically never achieved a clean audit due to irregular expenditure and the inadequate consequence management related to it. The GPAA has made a concerted progress towards a clean audit outcome during 2022/23 financial year under the guidance of the newly appointed Chief Executive Officer and the Acting Chief Financial Officer. This is evidenced by a visible R14 million (33%) decrease in the irregular expenditure of (R29 million) reported during 2022/23 against the R43 million reported during 2021/22. The R25 million of irregular expenditure was due to the historic irregular recurring contracts emanating from previous financial years. The CEO GPAA has taken a firm stance and decision to terminate these recurring irregular contracts in order to halt the continuation of irregular expenditure.

The decrease in irregular expenditure was achieved due to management initiatives of improving the internal controls around the procurement processes. The GPAA CEO, Acting Chief Financial Officer and relevant Chief Directors also improved on the implementation of historical pending consequence management cases relating to irregular expenditure.

All these initiatives took place even though the GPAA has operated without the following Level 15 Executive positions for a decade:

Chief Financial Officer

Chief Operations Officer

Head Corporate Services

A decade long lack of Director-General Positions at GPAA has led to this void and the fact that we are currently operating at over 200 contract positions, has led to the instability of the work force. The finalisation of vacant Director General positions is currently in the DG: Treasury’s desk and we await feedback. Subsequently on the 7 June 2023; The Minister of Finance has recommended to the Minister DPSA the GPAA structure for approval. The GPAA still await the approval of the baseline structure from DPSA. Some supply chain management vacancies still need to be filled to improve on the capacity and performance of the unit. The approval of the structure will ensure that operationally we are more stable and rigid in achieving our mandate and circumvent matters that impede the organisation from achieving a clean audit, amongst others.

Management’s efforts has been carried forward into 2023/24 and the results should reflect a significant improvement.

10.GOVERNMENT TECHNICAL ADVISORY CENTRE (GTAC)

GTAC had achieved a clean audit for the 2022/23 year

11. INDEPENDENT REGULATORY BOARD FOR AUDITORS (IRBA)

The IRBA already receives a clean audit.

12. LAND BANK

Actions at entity level

Reason for Land Bank’s unqualified audit with findings:

The Land and Agricultural Development Bank of South Africa (Land Bank) received an unqualified audit opinion with findings for FY2023 due to internal control deficiencies that were identified by the Auditor General of South Africa on the reporting of collateral that resulted in material adjustments. The underlying collateral management system works as intended. The finding resulted from the erroneous reporting wherein some portfolios’ collaterals were duplicated.

Remedial Action

The Board of Land Bank instituted an extensive remedial plan post the disclaimed audit opinion in FY2020. The remedial plan process continues to be implemented with focus not only on areas where deficiencies were identified but broadly across the different processes of the Bank to ensure that adequate internal controls are in place.

Specific remedial work is being undertaken on the management and reporting of collateral to address the audit findings raised by the Auditor General of South Africa (AGSA) in the FY2023 audit.

The Land Bank’s Internal Audit Department (which has been strengthened with the appointment of a permanent Chief Audit Executive effective 03 July 2023) provides an independent review of the remedial work by management.

Progress Monitoring and Oversight.

Implementation of the remedial plan is done through a dedicated management forum and monitored through the oversight role of the Audit and Finance Committee of the Board which meets on a monthly basis for this purpose.

13. OFFICE OF THE PENSION FUNDS ADJUDICATOR (OPFA)

Not applicable, the Office of the Pension Funds Adjudicator received a clean audit for the 2022-23 financial year.

14. OFFICE OF THE TAX OMBUD (OTO)

  1. Section 19(1) of the Tax Administration Act, 2011 (Act 28 of 2011) (TAA) provides that the Tax Ombud reports directly to the Minister of Finance and the Office of the Tax Ombud must submit an annual report to the Minister of Finance, within 5 months of the end of the South African Revenue Service (SARS) financial year.
  2. In turn, section 19(3) of the TAA makes provision for the Minister of Finance to table the annual report of the Office of the Tax Ombud to the National Assembly.
  3. The Office of the Tax Ombud (OTO) is not a public entity in terms of the Public Finance Management Act, 1999 (Act 1 of 1999) (PFMA).
  4. That said, the Auditor General South Africa (AGSA) currently performs the external audit assurance only on performance information of the Office of the Tax Ombud at the request of the Tax Ombud. The audit conclusion on the performance of the Office of the Tax Ombud against predetermined objectives is included in the 2022/2023 Annual Report of the Office of the Tax Ombud that was tabled by the Minister of Finance in the National Assembly on 29 September 2023 and discussed in the Standing Committee Finance on 11 October 2023.
  5. Therefore, the Office of the Tax Ombud received no material findings on its audit of pre-determined objectives for the 2022/2023 financial year.
  6. To maintain the status-quo the OTO will incorporate combined assurance approach within its governance structure that involves the integration and coordination of various assurance activities to provide a comprehensive and well-rounded view of risk management, control systems, and overall performance. This includes bringing together multiple assurance providers, such internal audit, external audit, and oversight committees, to collaborate and share information, findings, and insights.

15. PUBLIC INVESTMENT CORPORATION (PIC)

  1. Audit opinion: unqualified audit opinion with a finding.

 

The Auditor-General’s finding indicated that the investment activities performed did not, in all instances, comply with investment policies and guidelines, in that in some instances, the risk relating to politically exposed persons (PEPs) identified was not assessed to ensure that the necessary enhanced due diligence and enhanced monitoring processes are applied to the high-risk PEPs identified, as required by the established policy.

  1. Action:
  • The identified PEPs have been included in the PEP register.
  • The custodian of the PEP register is now the Compliance Department that gets weekly PEP activity from the system.
  • The policy will also be workshopped to the business.

16. SOUTH AFRICAN REVENUE SERVICE (SARS)

SARS received clean audits for its Expenditure Accounts (Own Accounts) (1), Revenue Accounts (2) and the report on the Audit of the Annual Performance Report (3) in the 2022/2023 financial year. The three (3) audit opinions attest to the quality of financial management in SARS and is aligned to one of its Strategic Objectives focused on inculcating good stewardship of its resources across the organisation.

SARS Internal Audit regularly perform audits on areas of risk. SARS has appointed resources such as Governance Specialists in the finance teams. Controls have been embedded to detect and pro-actively manage risks related to the regulated environment.

SARS also implemented action plans to not only sustain the audit outcome from 2022/23 but to further embed good financial management practices.

17. SASRIA SOC LIMITED

  1. Audit opinion: unqualified audit opinion with a finding.

Finding related to SASRIA’s failure to comply with section 55 of the PFMA insofar as it relates to the submission of the annual report, annual financial statements and the report of the auditors on those statements.

  1. Actions to be put in place
  • SASRIA will have an Audit Steering Committee, comprising of External Audit, other Assurance functions and management.
  • Ensure active management and implement improvements in communication and efficacy of the audit process.
  • External Audit will be requested to develop a project plan which will be approved by the Audit Committee. The progress against the plan will be monitored by the Steering Committee on a weekly/bi-weekly basis.
  • Significant deviations from the plan will be escalated to the Executive Committee and if no improvement to the Audit Committee.

22 December 2023 - NW3900

Profile picture: Alexander, Ms W

Alexander, Ms W to ask the Minister of Finance

Whether, noting that the Integrated Financial Management System (IFMS) has reported fruitless and wasteful expenditures of over R2,6 billion by the IFMS project since its inception and Auditor-General South Africa accordingly raised a qualified audit opinion against the National Treasury (details furnished), which subsequently led to various state agencies, including Special Investigating Unit, the Public Protector South Africa and the Directorate for Priority Crime Investigation conducting investigations to this effect, he will furnish Mrs WR Alexander with the findings of these investigations?

Reply:

The investigations have not been finalised and as a result the National Treasury is unable to provide a response to the above question at this stage. The Honourable Member is encouraged to request the findings from the relevant institutions when the investigations are complete.

22 December 2023 - NW3908

Profile picture: Nodada, Mr BB

Nodada, Mr BB to ask the Minister of Finance

With regard to the correspondence by the Government Employees Pension Fund in November 2022 informing its members who intended to retire in November or thereafter that they would not receive their full pension payments, and in light of the complaint received from a retiree (details furnished) that despite applying for her pension before November and not receiving any letter she did not receive her full pension, (a) what informed the retroactive application of the November correspondence and (b) how many individuals were affected by such retroactive application?

Reply:

a) The GEPF implemented its revised actuarial factors with effect from 1 November 2022. The actuarial factors of the GEPF are updated in accordance with any changes to the actuarial assumptions at each statutory valuation of the GEPF. In terms of the Government Employees Pension Law, 1996, (GEP Law), the actuarial factors are consulted with public sector labour unions. Upon conclusion of this process, the actuarial factors were implemented with effect from 1 November 2022, as referred to above. Pension benefits, as prescribed in the GEP Law, are determined and finally calculated as at date of service termination. The GEP Law specifies the date on which a benefit shall become payable to a member, pensioner or beneficiary, and this date is typically the last day of service at the employer.

Any Estimate of Benefits provided prior to the last date of service, is a mere estimation of current/future benefits. This is clearly indicated on the Estimate of Benefits which indicates that benefits are awarded in terms of the rules of the Fund and will be confirmed by the Fund when the benefits become payable.

Pension benefits are thus not calculated and/or confirmed on the date applying for retirement but on the information as on the last day of service. In this specific instance the Estimate of Benefits referred to, was provided as at 30 September 2022, being a date prior to the last day of service.

The actuarial factors applicable as from 1 November 2022 adjusted the actuarial factors applicable at 30 September 2022 and accordingly influenced the calculations. It is however not correct to state that the member did not receive her full pension. Members continue to receive their full benefits in accordance with the GEP Law, 1996, and rules. The adjustment to the actuarial factors were not applied retroactively as the adjustments were implemented effectively from 1 November 2022 onwards, applying only to exits on or after 1 November 2022.

b) The amended actuarial factors, which became applicable as from 1 November 2022, influenced all resignations as well as other exits where members had less than 10 (ten) years pensionable service and which members terminated service on or after 1 November 2022. Thus, all resignations and other exits from the GEPF, where the members’ exit date was on or after 1 November 2022, would have been influenced by the adjustment of the actuarial factors as all such benefits refer to the actuarial interest a member has in the GEPF. The adjusted actuarial factors was applied to all pension benefits paid as a result of resignation and other exits from the Fund where members had less than 10 (ten) years pensionable service, where the exit from the Fund occurred on or after 1 November 2022.

It is again confirmed that there was no retrospective application of the adjusted actuarial factors as it was implemented from a future date being 1 November 2022. The application of the adjusted actuarial factors follows the approval thereof by the GEPF Board of Trustees after the required consultation process with organized labour as per the GEP Law, 1996 and Rules of the GEPF.

The GEP Law,1996 and Rules provides for the adjustment to actuarial factors as part of the benefit structure of the GEPF. Actuarial interest factors are based on a set of financial and demographic assumptions as recommended by the Fund’s valuator in the statutory actuarial valuation report. These assumptions are expected to reflect the experience of the GEPF membership and its investments. The assumptions are based on reasonable expectations about future events and are guided by actual experience and statistics. The main driver of the actuarial factors is the investment returns above inflation, which the Fund’s investments are expected to earn from now until the pension benefits are payable. Economic conditions however change from time to time and, as a result, the actuarial interest benefits can rise or fall depending on how the actuarial factors is adjusted, as explained above.

Members however still received their pension benefits prescribed in the Rules of the GEPF as per the formula set out in the Rules.

It must be clarified that the adjustment to the actuarial factors apply consistently to all active GEPF members, maintaining fairness across the board and reflecting current economic realities.

22 December 2023 - NW3978

Profile picture: Mabiletsa, Ms MD

Mabiletsa, Ms MD to ask the Minister of Finance

(1)What does investors demand for premiums on debts to compensate for the risk of investing in the Republic imply on the relationship between the State and the financial sector considering that he stated in the Medium Term Budget Policy Statement that regardless of the maturity profile of loans and bonds that most of the debt is domestic; (2) whether the premium demand is one of the key factors determining the fiscal policy trajectory based on investor risk fears; if not, why not; if so, what are the relevant details?

Reply:

1. The predominance of domestic debt indicates that the local financial sector is heavily invested in government bonds and loans. This scenario fosters a mutually dependent relationship, wherein the financial well-being of the government significantly influences the stability and health of the domestic financial sector. If this risk premium were to increase (due to an impairment in risk perceptions) and National Treasury were not to include this increased premium into the price of government bonds, investors would choose to invest their cash in other instruments (i.e. corporate bonds or equity, which offer better return, albeit at greater risk). This would result in government being unable to borrow the funds necessary to finance the borrowing requirement. The same principle would apply when borrowing in foreign markets; however, there is less quantum demanded for South African bonds at attractive rates in the international markets. Higher premiums on government debt can lead to crowding out of private investment, as the government absorbs a significant portion of available credit. This can slow economic growth, affecting both the state and the financial sector. The risk premium highlights the need for sustainable borrowing practices, efficient debt utilization, and a clear plan for debt reduction.

2. Risk premiums, while a considerable factor, are not the sole determinants of fiscal policy. They are, however, a critical indicator of investor confidence and perceived risk. When investors demand higher premiums, it reflects their concerns about the country's ability to repay its debts, often influenced by factors such as political stability, economic performance, and fiscal management. Most domestic investors in government debt, such as pension funds and insurance companies, are crucial for the country's financial and economic stability. If the government's debt becomes unsustainable, these institutions could face severe challenges, impacting a broad spectrum of the population. The instances of US regional banks facing near collapse due to holding weakened debt, highlights the tangible consequences of fiscal mismanagement and the importance of maintaining liquidity through the appropriate government loans. It underscores the need for prudent fiscal policies and sustainable debt management. Chapter 3 of the MTBPS emphasizes government's commitment to sustainable debt management, ensuring that borrowing is balanced with economic growth and fiscal responsibility. This along with reforms in the Logistics, Electricity, Water and Communications sectors will ensure that government plays its part in reducing the risk premium.

22 December 2023 - NW3981

Profile picture: Abraham, Ms PN

Abraham, Ms PN to ask the Minister of Finance

What is the (a) performance of the amendments of Regulation 28 asset allocation for infrastructure of 40% in relation to public infrastructure as the Economic Reconstruction and Recovery prioritises infrastructure and private investment and (b) impact of the increased allocation of 45% foreign asset exposure on domestic investment?

Reply:

a) It is too early to provide a detailed answer to the question as the amended Regulation 28 only came into effect on 1 January 2023. The first investment reports, post the amendment, will be submitted to the Financial Sector Conduct Authority in 2024. Secondly, it will be difficult to make the comparison since there is no reference point to compare changes in investment in infrastructure due to the ERRP with the amendment to Regulation 28. It is also not only retirement funds that are expected to invest in infrastructure, but other asset managers that are not subject to Regulation 28.

In general terms the financial sector continues to heavily fund government. As noted in the MTBPS, National Treasury will seek to achieve infrastructure investment growth through establishing an Infrastructure Finance and Implementation Support Agency that will systematically address the need to crowd-in private sector finance and expertise into the public infrastructure programme. In addition, government will also widen the scope for concessional borrowing by creating new mechanisms through which private-sector investors and multilateral institutions can co-invest with government for selected infrastructure projects. These interventions will lay the basis for broader investment by private sector including pension funds through the 45% asset allocation to infrastructure investment in Regulation 28.

b) The share of foreign exposure relative to the 45% upper limit increased across all institutional investors moderately. Where increases in offshore asset allocations have occurred, retail investors i.e., unit trusts have accounted for the majority in percentage terms. For all institutional investors, offshore exposure remains at about 23% of total assets under management (AUM). The data suggests that the impact of the increases in offshore allowance has expanded the scope of possible outflows but has not triggered actual large outflows in line with the maximum permissible amounts.

22 December 2023 - NW3982

Profile picture: Skosana, Mr GJ

Skosana, Mr GJ to ask the Minister of Finance

What (a) is the performance of the Bounce-Back Support Scheme relative to the COVID-19 loan guarantee scheme and (b) are the profiles of the beneficiaries?

Reply:

a) In 2020 National Treasury launched the Covid Loan Guarantee Scheme (LGS) as part of a package of measures to help small and medium business survive the most severe lockdowns related the global Covid pandemic. The LGS enabled eligible businesses to access loans via commercial banks in terms of a finance facility administered by the Reserve Bank. At the termination of the LGS scheme (27 March 2021), banks had approved 14 827 in loans, with the LGS providing R14,6 billion in loans.

Following the conclusion of the LGS, South Africa experienced another economic set-back due to civil unrest in KwaZulu-Natal and Gauteng from the period 8 July 2021 to 19 July 2021. The civil unrest resulted in damage to business properties and caused major supply chain disruptions. The impact of the civil unrest was mostly felt by businesses, some of which were still recovering from economic losses caused by the Covid-19 pandemic induced lockdowns.

The Bounce Back Support Scheme (BBS) was launched in April 2022 and was terminated in April 2023. This scheme operated on an opt in basis. The BBS resulted in 3211 small businesses being provided with support. The total disbursed amounts was around R 1 billion (R935,385,620.)

2. Data on the geographic and other demographic information was not collected.

22 December 2023 - NW3984

Profile picture: Shaik Emam, Mr AM

Shaik Emam, Mr AM to ask the Minister of Finance

What is the total (a) local and (b) foreign debt owed by the three spheres of government and the state-owned companies?

Reply:

Table 3.8 from Chapter 3 of the MTBPS 2023 shows a projected national government’s gross debt. Gross debt is projected to reach R5.28 trillion by end of 2023/24. This debt is made up of domestic debt of R4.64 trillion and foreign denominated debt of R595.2 billion.

22 December 2023 - NW4134

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

What (a) are the relevant details on the specific initiatives underway to rectify the failures in preventing and/or mitigating systemic events within the financial sector and (b) proactive measures is the National Treasury considering, to bolster the regulatory framework that deters banks from manipulating the Rand through illicit practices such as price-fixing and market allocation in the future?

Reply:

The misconduct investigated by the Competition Commission is specifically the type of abuse the National Treasury considered in 2011 when proposing and implementing the Financial Sector Regulation Act (FSRA) as part of the Twin Peaks reform.

This reform established a new dedicated market conduct regulator to ensure that all financial institutions treat their customers fairly and operate with the highest ethical standards, which is the nature of the misconduct Standard Chartered Bank was found to have committed.

Specific reforms have also been undertaken as a result of observing misconduct in other jurisdictions to ensure that these do not occur domestically. For this reason, National Treasury tabled Regulations in Parliament in March 2023 which proposed to designate the “provision of a benchmark” as a financial service in accordance with section 3(3) of the FSRA, and to specify that the Financial Sector Conduct Authority is the responsible authority for the regulation, supervision and oversight of the financial sector. In terms of section 288(1)(b) of the FSRA, which empowers regulations to provide for procedural and administrative matters that are necessary to implement the provisions of this Act, some specific powers and duties are provided to the Financial Sector Conduct Authority in relation to the provision of benchmarks to enable the effective regulation and supervision of the “provision of a benchmark”.

In 2024, National Treasury will introduce further legislation to ensure South African financial markets are fair, transparent and operate with integrity. The Conduct of Financial Institutions (CoFI) Bill proposes that banks and other financial institutions in the Financial Exchange market are carried into the CoFI licensing activities and will be subject to the CoFI Act in addition to the markets regulation. This implies that requirements for good governance, transparency, managing conflicts of interest, among others will continue to apply.

11 December 2023 - NW4003

Profile picture: Mthethwa, Mr E

Mthethwa, Mr E to ask the Minister of Finance

Since the financial services sector is a highly regulated sector, what (a) exemptions or gaps has his department identified as loopholes that allow the existence of bogus financial services and medical insurance companies that swindle vulnerable people (details furnished) and (b) forms of communication have been used to reach out and educate people about such scams, especially those who have limited or no access to modern communication resources and skills?

Reply:

a) South Africa's financial services sector is sophisticated and well-regulated, and it offers a vast array of financial products and services. This level of variety requires consumers to be equipped with the information, knowledge, and skills necessary to evaluate their options and select the ones that best suit their needs and circumstances. This is especially true for populations that have historically been underserved by our financial system and those with low incomes who confront additional obstacles owing to resource constraints.

Several gaps have been identified as loopholes that allow the existence of bogus financial services that swindle vulnerable people. Firstly, limited financial literacy levels among South African consumers. According to the 2020 Financial Sector Conduct Authority Baseline survey, South Africans have an average financial literacy score of 52 out of 100. This suggests that South African consumers have limited knowledge to understand financial sector products/services. This exposes South Africans to predatory lending, financial scams, and acquiring inappropriate financial products or services with inadequate disclosures. As a result, there is a continued need for comprehensive financial consumer education programmes, complemented with a range of consumer protection measures.

Secondly, the rapid pace of digitalisation has encouraged development of innovative financial sector products and services, creating new opportunities and risks for consumers. While technology and digital financial services offer great opportunities to boost financial inclusion, increase access to the mainstream financial system and increase consumer conveniences, this development, adds complexity to how consumers engage with the financial services industry. Challenges are more pronounced for consumers with low financial and digital literacy.

According to the South African Banking Risk Information Centre annual crime statistics report for 2022[1], South Africa faces challenges related to an array of financial and banking crimes spanning contact crimes, digital offenses, application fraud, and card fraud. Furthermore, South Africans continue to fall prey to get-rich-quick schemes. Scammers are increasingly exploiting conventional and trusted systems, such as stokvels. Scammers may, for instance, present themselves as legitimate stokvels, investment schemes, or property stokvels when, in fact, they are Ponzi or pyramid schemes[2]. The pursuit of unreasonably high returns also makes uninformed consumers easy targets for fraudulent investments. With the emergence of crypto assets, Ponzi schemes that are crypto based have become more common[3]. There is a need for greater vigilance and caution when engaging with this sector of the financial system.

b) National Treasury, through the National Consumer Financial Education Committee (NCFEC), comprising of representatives of government departments, regulators, financial sector industry associations, professional bodies, academia, and non-profit organisations, has annually been running a Money Smart Week South Africa (MSWSA), a financial education awareness campaign since October 2018. A variety of topics[4] including scam awareness are addressed through community radio station interviews, in-person activations and social media channels to relay the messages to consumers.

Furthermore, the Financial Sector Conduct Authority (FSCA) regularly issues warnings to the public on fraudulent companies and individuals purporting to be offering legitimate financial services to the public. Members of the public are always urged to be cautious and verify the authenticity and registration status of service providers, by contacting the FSCA through a number of mechanisms the FSCA has made available on their website.

National Treasury has not been made aware of the existence of bogus medical insurance companies.

  1. South African Banking Risk Information Centre annual crime statistics report for 2022 https://www.sabric.co.za/media/gq4hmbjw/sabric-annual-crime-stats-2022.pdf

  2. FSCA issues public warning against United African Stokvel https://www.fsca.co.za/News%20Documents/FSCA%20Press%20Release%20-%20FSCA%20warns%20the%20public%20against%20United%20African%20Stokvel%20-%2017%20July%202023.pdf

  3. FSCA media statement on investigation on Mirror Trading International Available https://www.fsca.co.za/News%20Documents/FSCA%20Press%20Release%20-%20The%20FSCA%E2%80%99s%20investigation%20on%20Mirror%20Trading%20International%20nears%20completion%2017%20December%202020.pdf

  4. Money Smart Week South Africa 2023 Activity List https://www.mswsa.co.za/MSWSA%20Documents/Money%20Smart%20Week%20South%20Africa%202023%20Activity%20List.pdf

11 December 2023 - NW3547

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

(1) Noting that the Financial Action Task Force (FATF) listed money laundering as one of the reasons to greylist the Republic, what (a) is the total monetary value of illicit financial flows (i) to and (ii) from the Republic and (b) total amount of the illicit financial transactions were conducted (i) in cash and (ii) electronically; (2) what are the (a) specific areas that need improvement to combat money laundering as identified by the FATF and (b) details of the progress that National Treasury has made in fixing the specified areas in relation to the target

Reply:

1. Please note that responses on the greylisting of the country by the Financial Action Task Force has been provided including a response relating to illicit financial flows. Please refer to PQ943, PQ3967, PQ2641, PQ2642 and PQ4712.

In PQ4712, the following was indicated, the United Nations Economic Commission for Africa and the United Nations Conference on Trade and Development UNCTAD were running a 12-country pilot on the building of in-country capacity on the measurement of Illicit Financial Flows, with the pilot later being expanded to 22 countries, of which South Africa was one of the pilot member countries. The pilot has only produced unofficial estimates.

2. The areas that were identified by the FATF when it greylisted South Africa are listed in National Treasury’s media statement (https://www.treasury.gov.za/comm_media/press/2023/2023022401%20Media%20statement%20-%20Response%20to%20FATF.pdf which was published by
National Treasury on 24 February 2023. Furthermore, as indicated in the Medium-Term Budget Policy Statement on 1 November 2023, since the greylisting of the country by the FATF in February 2023, a large number of government departments and agencies – including SAPS, the Hawks, NPA, SIU, SSA, SARB, FSCA, and SARS – have been working hard to address the deficiencies. The FATF noted during its plenary meeting on 27 October 2023 that the work is showing positive results, with South Africa having addressed 15 of the 20 technical deficiencies in our legal framework and making good progress on 17 of the 22 effectiveness action items, including 2 that are now deemed to be largely addressed.

11 December 2023 - NW3567

Profile picture: Graham, Ms SJ

Graham, Ms SJ to ask the Minister of Finance

(1)(a) On what date was the preliminary Vision Generation Benefit Energy Report tabled to the National Treasury, (b) what additional specifications were given to the consultants beyond the original mandate of the investigation and (c) what is the deadline for the final report, including the additional mandate; 2) whether he will furnish Ms S J Graham with the first report; if not, why not; if so, what are the relevant details?

Reply:

1. (a) The draft report (termed revision 1) of the VGBE Energy Service GmbH’s Independent Assessment of Eskom’s Operational Situation was submitted to the National Treasury on 21 July 2023.

(b) There was no additional mandate given to the consultants beyond the original scope of work that was agreed on which included the following:

  • to undertake a review of the operational situation of the coal fleet;
  • to assess the power plants maintenance budgets;
  • to assess the skill levels of power plant personnel; and
  • to assess the status of the transmission grid.

(c) The final report (termed revision 2) was submitted to the National Treasury on 01 September 2023.

2. The Minister of Finance is currently engaging with his Cabinet colleagues on the recommendations of the report to agree on the way forward as Eskom is expected to incorporate the findings into its Corporate Plan for 2024/25 financial year as part of the Eskom Debt Relief operational conditions. Once these consultations have been concluded, the conditionalities of its publication will be finalised.

11 December 2023 - NW3624

Profile picture: Masipa, Mr NP

Masipa, Mr NP to ask the Minister of Finance

What is the detailed breakdown of the Land Bank of South Africa’s approvals from the blended finance and agro-energy fund regarding (a) farm size, (b) region and (c) commodity group since 1 January 2022 to the latest specified date for which information is available?

Reply:

1. Blended Finance Scheme.

The approval information of the Blended Finance Scheme (BFS), which was launched in October 2022, is provided in the attached Annexure A.

The Bank prepares a report on a quarterly basis to provide the kind of details that is being requested. Therefore, the information herewith provided is for a period from the launch of the BFS to the end of September 2023.

2. Agro Energy Fund.

The Agro Energy Fund was launched on the 29th of August 2023. There are no transactions approved yet. As at 31st October 2023 the Bank had received 19 applications to the value of R53m that are still going through the due diligence assessment.

11 December 2023 - NW3661

Profile picture: Graham, Ms SJ

Graham, Ms SJ to ask the Minister of Finance

(1)Whether the $1 billion Development Policy Loan from the World Bank to the value of R19 billion was granted on the basis of a business plan presented in support of the loan; if not, what are the relevant details of the basis on which the loan was granted; if so, will he furnish Ms S J Graham with a copy of the business plan; (2) what are the terms of the loan in respect of the (a) loan period, (b) interest rate and final value of the loan, (c) amortisation schedule, (d) repayment frequency, (e) collateral and guarantees, (f) default terms, (g) late payment charges and (h) any other terms; (3) whether the loan falls within the funding made available in terms of the Just Energy Transition Programme; if not, why not; if so, what are the relevant details, including the date on which the loan will take effect?

Reply:

(1) The instrument used for this loan is a Development Policy Operation (DPO), which means this loan is provided to South Africa on the strength of a completed set of policies and reforms. The institutional reforms that are referenced on the DPO fall under climate change and the electricity sector, mostly covered under NECOM.

(2) The DPL terms includes the following:

Institutions

Disbursement
date

Interest rate

Terms
(years)

Grace
period1
(years)

Amount
billion

World Bank

n/a

6-month SOFR plus 0.95%

15

5

US$1.0

(c) & (d) the loan and interest are to be repaid biannually in March and September, principal repayment to begin in 2029 and end in 2038.

(e) The DPL is a sovereign loan and does not require collateral or guarantee.

(f) & (g) In line with the World Bank’s International Bank of Reconstruction and Development (IBRD) General Conditions for Loans and Guarantees, if any amount of the withdrawn loan balance remains unpaid when due and such non-payment continues for a period of thirty days, then the Borrower shall pay the Default Interest Rate on such overdue amount in lieu of the interest rate specified in the Loan Agreement.

(h) All other conditions of the DPL are governed by the IBRD General Conditions for Loans and Guarantees https://documents1.worldbank.org/curated/en/577851500256855740/pdf/GCs-Board-paper-June-22-Final-with-Annexes-06232017.pdf

3. No, this type of funding is categorised as budget support loans aimed aims to support South Africa’s economic recovery, inclusive and accelerated growth, and commitment to the just transition to a low-carbon and resilient economy.

The loan will take effect within 90 days from signing the loan agreement.

11 December 2023 - NW3833

Profile picture: Loate, Mr T

Loate, Mr T to ask the Minister of Finance

(1)Whether he has found that the Government is approaching a period of elevated redemptions requiring the repayment of a significant amount of government debt that will have reached its maturity date; if not, what is the position in this regard; if so, (a) which debt was reaching maturity between the latest specified date for which information is available and 31 March 2024, (b) what will be the amount of the total debt that will have to be redeemed by that date, (c) will the specified debt be inclusive of the debt incurred on behalf of Eskom and (d) in which strategic manner will the Government secure the funds to honour its debt on maturity between the latest specified date for which information is available and 31 March 2024; (2) whether the Government is considering an increase in tax to meet its fiscal obligations; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

1. Table 3.7 (below) of Chapter 3 of the MTBPS provides a breakdown of redemptions for the current year and over the medium term. (a)(b) Government will redeem debt of R155.5 billion in 2023/24, (c) R78 billion has been penciled in for Eskom in 2023/24 (d) the gross borrowing requirement will be raised through the issuance of domestic long term loans, domestic short term loans, foreign loans as well as the drawdown of cash balances (refer To table 3.7 below).
A screenshot of a report

Description automatically generated

2. Chapter 3 of the 2023 MTBPS states: “... the Minister of Finance will propose tax measures to raise additional revenue of R15 bliion in the 2024 Budget”. In this regard, Budget 2023 will provide details fo measures to be implemented.

11 December 2023 - NW3883

Profile picture: Nolutshungu, Ms N

Nolutshungu, Ms N to ask the Minister of Finance

What measures have been put in place to ensure that the average working class has more money in their pockets than what they are paying to the Government in taxes, because their contribution made to the fiscus is not matched by the services they receive from the State?

Reply:

The South African income tax system is progressive, meaning that taxpayers who earn more pay a higher rate of tax than those who earn less. Consequently, taxpayers at the lowest tax brackets get to take home a larger portion of their income after tax than those at the higher income tax brackets. For example, taxpayers who earn less than R 95 750 per annum (for those below 65 of age) fall below the tax threshold, meaning they keep 100 per cent their income after tax. In contrast, those who earn in excess of R 1.817 million per annum have to pay 45 per cent tax on their earnings above that amount. The majority of income tax revenue is collected from the higher income brackets. The tax brackets below indicate at which percentage each income group is taxed. South Africa’s graduated income tax scale ensures that there is progressivity and equity in the tax system.

Income tax brackets for 2023/24

Taxable Income

Rates of tax

R0 - R237 100

18% of each rand

R237 101 - R370 500

R42 678 + 26% of the amount above R237 100

R370 501 - R512 800

R77 362 + 31% of the amount above R370 500

R512 801 - R673 000

R121 475 + 36% of the amount above R512 800

R673 001 - R857 900

R179 147 + 39% of the amount above R673 000

R857 901 - R1 817 000

R251 258 + 41% of the amount above R857 900

R 1817 001 and above

R644 489 + 45% of the amount above R1 817 000

Over the 2024 MTEF period, 61 per cent of consolidated non-interest spending goes to the social wage towards healthcare, education, social protection, community development and employment​.

11 December 2023 - NW3899

Profile picture: Alexander, Ms W

Alexander, Ms W to ask the Minister of Finance

(1)In light of the expenditure cuts presented in the 2023 Medium-Term Budget Policy Statement, and with reference to his statement affirming that the cuts were not made without detailed analysis, what are the relevant details of the specific analytical model employed to ensure that well-functioning departments with sound financial management are not adversely affected; (2) what are the reasons to subject departments that demonstrate effective governance to the same fiscal constraints as those that do not perform adequately?

Reply:

1. The expenditure data presented in the 2023 MTBPS is a synopsis of the comprehensive details that will be presented at the time of the 2024 Budget. In the meantime, as indicated in the 2023 MTBPS the rise in debt-service costs, and weaker revenue collection, is having an adverse impact on the total amount available for government spending. This is the first and most fundamental consideration.

The National Treasury conducts regular assessment of the financial performance of departments, including in respect of entities that fall under the ambit of specific Ministries. In addition, since 2021 the National Treasury has conducted detailed spending reviews whose outcomes have been shared with departments. With this in mind, and in the context of proposed spending reductions, the National Treasury’s assessments has highlighted poor or low spending over time, poor programme performance, the accumulation of surpluses within departmental accounts and entities, own revenue generation capacity, and opportunities for savings as key considerations in applying reductions. In addition, broader policy decisions of government to refocus priorities has an impact on the decisions related to spending allocations.

The budget process, especially any downward or upward adjustments, is undertaken as a collaborative and consultative process within government. This is because it involves difficult choices and decisions that cannot and should not be made in a purely mechanistic fashion. Moreover, departments and sectors of government perform vastly different functions.

The choices and decisions that must be made are discussed in engagements at the national level in the Ministers’ Committee on the Budget, as well as Cabinet. For sub-national governments, all relevant budgetary issues are determined through the Budget Council (a legislated structure composed of provincial MECs for Finance and the Minister of Finance), and the Budget Forum (a legislated forum that includes members of the Budget Council, the Department of Cooperative Governance, and the South African Local Government Association (SALGA). Prior to these discussions, direct engagements take place between departments and officials of the National Treasury on the details of their budgets. Through these processes, agreements are reached on the how to manage the adverse situation for the fiscus, including the choices for spending reductions. Some of these issues remain under discussion.

2. The fiscal constraints on government and the budget are determined by economic performance, tax revenues and market conditions for borrowing. High and rising debt-service costs act as an automatic crowding-out of government spending priorities, including the most important priorities. For this reason, the 2023 MTBPS proposes staying the course for growth and sound public finances, in order to arrest this negative trend. The MTBPS proposal includes measures to boost economic growth so as to improve tax revenue collections without increasing the individual burden on tax-payers – otherwise known as base expansion, and some spending reductions to ensure that the debt position of government does not go out of control. This strategy, if implemented, will prevent the need for even more severe spending adjustments to the budgets of critical service delivery functions.

11 December 2023 - NW3938

Profile picture: De Villiers, Mr JN

De Villiers, Mr JN to ask the Minister of Finance

Whether (a) he, (b) the Deputy Minister and (c) any other official in the National Treasury attended the Rugby World Cup final in France in October 2023; if not; what is the position in this regard; if so, what (i) are the relevant details of each person in his department who attended the Rugby World Cup, (ii) is the total number of such persons and (iii) were the total costs of (aa) travel, (bb) accommodation and (cc) any other related costs that were incurred by his department as a result of the trip(s)?

Reply:

 

(a)

Minister

(b)

Deputy Minister

(c)

Any other National Treasury official

(i) Details of each person in department who attended the Rugby World Cup in France in October 2023

No

No

No

(ii) Total number

N/a

N/a

N/a

(iii) (aa) Travel

Nil

Nil

Nil

(iii) (bb) Accommodation

Nil

Nil

Nil

(iii) (cc) Any other related costs

Nil

Nil

Nil

11 December 2023 - NW3989

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

Whether he intends to introduce a conditional grant, specifically the Local Economic Development Grant, aimed at stimulating the local economy to drive economic development and address the pressing issue of unemployment in rural areas; if not, why not; if so, what are the relevant details?

Reply:

Municipalities have the option to utilise several grants, such as the Integrated Urban Development Grant (IUDG), Municipal Infrastructure Grant (MIG), and Urban Settlements Development Grant (USDG), for infrastructure-based LED initiatives. This is an acceptable practice. However, in terms of a specific introduction of a conditional grant like the Local Economic Development Grant, created to drive economic development and alleviate unemployment in rural areas, we are unable to offer details until the conclusion of the current review. Currently, government is reviewing the structure and system of conditional grants, limiting significant changes to existing grants until the review is completed.

11 December 2023 - NW4004

Profile picture: Mthethwa, Mr E

Mthethwa, Mr E to ask the Minister of Finance

Whether, following the pronouncement to write-off Eskom electricity bills of indebted municipalities, he has considered the same approach for the poor people who are deeply indebted to their municipalities to such an extent that some have lived for long periods without electricity because of the confiscated Eskom transformers in their areas?

Reply:

There are two main challenges in terms of arrears owed to Eskom as well as municipalities: first, consumers who do not pay for municipal services delivered; and second, a lack of leadership to ensure that credit control is enforced and Eskom and / or municipal revenue is collected. As a result, a blanket approach to consumer debt write-off is not economically viable, affordable or prudent as it will not address these underlying challenges and will likely further exacerbate the consumer debt owed to Eskom and municipalities.

In this context, it should be noted that the write-off of consumer debt owed to municipalities and Eskom falls within the ambit of Eskom and / or the respective municipalities who are providing the consumer with electricity within the demarcation and cannot be separated from proper indigent management.

Annually the Local Government Equitable Share (LGES), based on the most recent statistical data, provides for a package of free basic services (FBS), including 50 kilowatt hours free electricity to poorer households within the identified municipal demarcations (including Eskom supplied areas). Unfortunately, the National Treasury analysis indicates that many municipalities do not provide all households that qualify with this benefit and many municipalities divert the LGES: FBS component earmarked for poorer households to fund other municipal priorities and salaries. Consequently, they do not pay Eskom the FSB: electricity component.

Both the Eskom and municipal debt relief conditions allows the write-off of consumer debt. However, this is subject to the implementation of pre-paid smart metering for any consumer who is unable to repay Eskom or the municipality coupled with restricting electricity to the national FBS: free electricity policy limit in the case of indigent consumers.

Please refer queries regarding the removal or confiscated transformers to Eskom as they are the appropriate institution to respond to this matter.

10 November 2023 - NW3247

Profile picture: Lees, Mr RA

Lees, Mr RA to ask the Minister of Finance

(1)Whether he has found that pronouncements made by a certain foundation on various matters (details furnished) constitute the type of activities that a public benefit organisation (PBO) may not engage in; if not, what is the position in this regard; if so, (2) whether the (a) National Treasury and (b) SA Revenue Service intend to review the approval of the specified foundation (name furnished) as a registered PBO with an 18A classification; if not, why not; if so, what are the relevant details?

Reply:

1. SARS cannot speak to the specifics of a particular case. However, the legal position is that a Public Benefit Organisation (PBO) approved by the Commissioner under section 30 of the Income Tax Act, must conduct one or more Public Benefit Activities (PBAs). These activities are listed in the Ninth Schedule to the ITA. In general, these activities must be conducted in a manner referred to in section 30 of the ITA i.e.

  • In a non-profit manner and with an altruistic and philanthropic intent;
  • Should not be intended to promote the economic self-interest of anyone beyond reasonable remuneration; and
  • Should be widely accessible to the general public at large (not small and exclusive groups).

In determining whether a PBO is conducting the activities as required in law, SARS will consider the merits of each case on the facts and within the framework of the legal provisions available.

2. to reassure the Honourable member that SARS addresses all non-compliance irrespective of who the taxpayer may be without fear, favour or prejudice. Again, SARS cannot speak to the specifics of a particular case. However, where it is discovered that any PBO has contravened the conditions of its approval as stated in law, its exemption will be taken on review and, if necessary, withdrawn and subjected to related tax consequences. All other sanctions available to SARS through the Tax Administration Act also apply to PBOs. Such measures available to SARS include conducting of audits and other administrative actions. In executing its legal mandate, SARS deals with all acts of non-compliance by any PBO without fear, favour or prejudice.

10 November 2023 - NW3043

Profile picture: Wessels, Mr W

Wessels, Mr W to ask the Minister of Finance

(1)Whether all state departments and public entities still pay their monthly contributions on behalf of their employees to third parties such as the Government Employees Pension Fund, Medical Schemes and the SA Revenue Services; if not, (a) which (i) state departments and/or (ii) public entities are in arrears with contributions in this regard, (b) what total number of employees are affected in each case, (c) by what amounts are such state departments and/or public entities in arrears and (d) what steps are being taken to rectify the matter; (2) whether any shortages in the fiscus played a role in the specified state departments and/or public entities being in default; if not, what is the position in this regard; if so, what are the (a) relevant details and (b) risks of (i) state departments and (ii) public entities continuously defaulting with contributions to the third parties?

Reply:

Government Employees Pension Fund (GEPF)

(1) As of the conclusion of the first quarter of the fiscal year 2023/2024, all state departments and public entities participating in the Government Employees Pension Fund have been diligent in remitting their monthly contributions on behalf of their employees to the Fund. The data indicates that 99.90% of the total monthly pension contributions due were received and reconciled punctually as mandated by the relevant legislation.

(a)

(i) The minor discrepancy of 0.10% does not reflect arrears from any particular state department or public entity but rather pertains to adjustments necessitated by various scenarios such as service termination or changes in service conditions.

(ii) Consequently, there are no specific public entities identified as being in arrears with contributions.

(b) Given the nature of the discrepancy, it does not affect a quantifiable number of employees in a manner that would result from arrears in contributions.

(c) The financial impact represented by the 0.10% discrepancy is being analysed and resolved on a regular basis. The administrator conducts a reconciliation process which is a routine and rigorous part of ensuring compliance and accuracy in the contributions made to the Fund.

(d) To rectify the matter and ensure complete reconciliation:

- A robust process of reconciliation is conducted monthly to address any discrepancies and ensure that contributions reflect the accurate service conditions of all employees.

- Any adjustments required are being handled expeditiously, with a standard resolution timeframe of 30 days.

- Continuous monitoring and engagement with all participating employers are being maintained to ensure timely payment and accurate reporting of contributions, thus fostering a culture of compliance and transparency.

(2) No. All the concerned state departments and public entities have maintained a consistent track record of timely contributions, irrespective of the fiscal situation

South African Revenue Service (SARS)

1. From an employer point of view, SARS pays all statutory contributions on behalf of its employees to third parties such as Government Employees Pension Fund, Medical Schemes and the South African Revenue Service (PAYE, UIF and SDL) in full on a monthly basis. The current CC measures has no negative impact on the monthly commitments for the current staff establishment covered by the grant allocation.

From a Revenue Administration point of view, SARS is responsible for the collection of PAYE, UIF and SDL part of the payroll creditors (contributions) from respective employers. Pension and Medical Aid contributions are paid directly to the respective fund administrators.

(a) Of the 5,303 Departments and Public entities, 4,899 (92%) pay their PAYE, VAT and other tax obligation on time. In observing taxpayer confidentially provision of the Tax Administration Act, we are unable to provide any further specific taxpayer information including the list of the defaulting taxpayers as prompted by the question, it should be noted further that the specific entities can provide directly to the parliamentary oversight bodies such information.

(b) SARS information is limited to Employer account and the defaulting taxpayer debt is at an aggregate entity level. Information on the affected Employees is not yet available from the current Tax Administration data.

(c) The balance of 404 entities (from the total of 5,303) owe SARS R5.9bn in debt for the 2023/24 fiscal year comprised of PAYE R2.4bn, VAT R3.5bn. Of the R5.9bn debt R1bn is under dispute leaving a balance of R4.9bn undisputed of which R2.9bn is older than 3 years.

(d) SARS debt collection processes are employed to follow up on defaulting taxpayers and arrangements made to enforce that the debt is settled within reasonable time where feasible. Engagements with National Treasury to deduct from Grants the necessary amounts to settle taxes owed to SARS have been evoked as the last resort following lack of cooperation or lack of positive response from defaulting taxpayers. It is genuinely concerning for State Organs not to comply with the very tax laws that generate revenue that enables them to exist in order to delivery on their respective mandates of rendering public service to SA citizens who are the taxpaying community.

2. Prior to the Cost Containment measures coming into effect, SARS records have over the years noted an increasing level of Departments and SOCs indebtedness to SARS. There is no correlation between the current Cost Containment measures and the increase in the Departments and SOCs inability to pay their tax obligations over to SARS. This will be monitored closely in the coming months to observe trends post the implementation of the Cost Containment measures.

(a) Not applicable

(b) (i) Not applicable.

(b)(ii) Not applicable

 

16 October 2023 - NW2910

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

What mitigation strategies has the National Treasury put in place to ensure that fiscal consolidation efforts in 2024 do not further hamper the ability of government departments to deliver crucial services?

Reply:

Since the 2020 MTBPS fiscal consolidation measures have been driven by multiple goals: to eliminate the primary fiscal deficit and stabilize debt; support economic growth through fiscal stability and a composition of spending focused on investment rather than consumption; and to protect funding for the most vulnerable. Accordingly, the budget has retained the percentage spent on the social wage at around 60 per cent of the total budget. Government intends to broadly maintain this approach.

In the meantime, and to limit the negative effects of weaker-than-anticipated revenues and more difficult financial conditions, proposed savings and cost-cutting measures are meant to protect the ability of government to sustain the spending on its key service-delivery priorities.

16 October 2023 - NW3130

Profile picture: Mafanya, Mr WTI

Mafanya, Mr WTI to ask the Minister of Finance

Given the numerous complaints by the State Owned Companies in terms of being hamstrung by provisions of the Public Finance Management Act, Act 1 of 1999 (PFMA) and the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA), including their inability to compete on equal footing with the private sector companies, what are the reasons that he does not proactively exercise the applicable provisions of both the PFMA and the PPPFA to exempt all the stateowned companies for complying with the PPPFA and the PFMA, just like Telkom was exempted?

Reply:

In terms of section 3 of the Preferential Procurement Policy Framework Act (Act No. 5 of 2000 – “the PPPFA”), the “Minister may, on request, exempt an organ of state from any or all the provisions of this Act if –(a) it is in the interest of national security; (b) the likely tenderers are international suppliers; or (c) it is in the public interest.

The Minister, before exempting any organ of state, including State-Owned companies, must receive a request from that organ of state, setting out the reasons for the exemption request, which reasons are limited to the three grounds provided for in the PPPFA, whereupon the Minister must then assess the reasons provided in the application for exemption.

The objects of the PPPFA are to give effect to section 217(3) of the Constitution by providing a framework for the implementation of the procurement policy contemplated in section 217(2) of the Constitution. If organs of state are exempted from the PPPFA, they will not have any basis on which to provide for empowerment objectives in their institutional policies.

With regard to Telkom, it should be noted that Telkom was exempted from the PFMA and PPPFA because the State is no longer the majority shareholder in Telkom.

16 October 2023 - NW3096

Profile picture: Lees, Mr RA

Lees, Mr RA to ask the Minister of Finance

(1)Whether the National Treasury has done a due diligence to determine the ability of the Takatso Consortium to make the R3,0 billion payment to SA Airways (SAA) as is required in the agreement pertaining to the transfer of 51% of the shares to the Takatso Consortium; if not, why not; if so, what are the relevant details of the (a) process followed to conduct the due diligence and (b) outcome of the due diligence; (2) whether the due diligence process made a determination that the R3 billion will be made available to SAA by the consortium; if not, why not; if so, what are the relevant details?

Reply:

The process of selecting a Strategic Equity Partner for SAA and the subsequent negotiations and conclusion of the terms and conditions for the sale of 51% of SAA’s shareholding was performed by the Department of Public Enterprises.

The National Treasury did not perform any due diligence related to the transaction as it was not subject to section 54(2) of the PFMA. The Minister of Finance’s approval in terms of Section 54(2) of the PFMA was not required for this transaction. Section 54(2) of the PFMA does not find application in this instance as it is the government, as the shareholder selling its stake in SAA. Section 54(2) of the PFMA only finds application where a public entity concludes any of the transactions mentioned under Section 54(2) of the PFMA. In other words, Section 54(2)(c) would apply in an event whereby SAA was seeking to dispose a significant shareholding in any of its subsidiaries or was seeking to acquire significant shareholding in another company.

16 October 2023 - NW2920

Profile picture: Sarupen, Mr AN

Sarupen, Mr AN to ask the Minister of Finance

(a) What were the reasons that the National Treasury failed to anticipate and include the 7,5% public sector wage increase agreed to recently in the main 2023-24 Budget and (b) on what basis was the 0% increase modelled?

Reply:

The mis-alignment between the budget process and the finalisation of wage agreements has been a feature of South Africa’s public sector remuneration system for many years.

The budget included a 1.5 per cent pay progression increase for civil servants in 2023, which was the baseline that existed at the time, taking into account the projected change in staffing numbers. The National Treasury excluded any further adjustments to compensation of employees to steer clear of pre-empting the outcome of the wage settlement in 2023/24. This was in line with the discussions at the Public Service Labour Summit on collective bargaining, that was convened and attended by both Government and Labour Unions, from 28 to 31 March 2022. It was also agreed in the Summit that parties will work towards the alignment and the timing of the annual budget process, with the PSCBC wage negotiations process for public service employees.

An ideal situation moving forward, as agreed with labour unions, would be to conclude the wage negotiations processes before the finalisation of the budget for the subsequent financial year to ensure the credibility of the fiscal framework.

06 October 2023 - NW3131

Profile picture: Mafanya, Mr WTI

Mafanya, Mr WTI to ask the Minister of Finance

In light of the latest account provided by the Special Investigating Unit on the malfeasance by the National Treasury in the implementation of the infamous Integrated Financial Management System project, what consequence management steps will he take against officials responsible for the litany of missteps which resulted in hundreds of millions of Rands in irregular and fruitless expenditure?

Reply:

The National Treasury noted the presentation made by the Special Investigating Unit (SIU) to the Standing Committee on Public Accountants on Wednesday, 13 September 2023. The National Treasury will comprehensively respond to the matters raised in the referrals by the SIU to the National Treasury, after receipt of the SIU’s final report, including its entire set of supporting documents and annexures. The National Treasury will also fully co-operate with all law enforcement agencies.

06 October 2023 - NW2919

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

What consultation process does the National Treasury undertake before finalising the cost-containment measures to assist national departments, public entities and provinces to close a fiscal gap?

Reply:

Various high-level forums of government have been briefed about the fiscal challenges in the current fiscal year and the need for urgent and difficult measures to be taken to forestall their damaging impact during the course of the financial year. This includes briefings and discussions at Cabinet, the Minister’s Committee on the Budget, the Budget Council, the Forum of South African Directors-General (FOSAD), and the Technical Committee for Finance, which is a committee of Provincial Treasuries. In addition, the National Treasury has publicly highlighted the difficult financial constraints facing government and its implications during a meeting of NEDLAC as well as in the 2024 Medium-Term Expenditure Framework (MTEF) budgeting guidelines, which are published on the website of the National Treasury.

In all of these engagements, the National Treasury emphasized that measures will be required to achieve savings, improve efficiency and contain costs.

06 October 2023 - NW3100

Profile picture: Kruger, Mr HC

Kruger, Mr HC to ask the Minister of Finance

Whether, with reference to the reply to question 2675 on 1 September 2023 by the Minister of Cooperative Governance and Traditional Affairs and the 2020-21 report of the Auditor-General which stipulates that 84% of municipalities in the Republic failed to pay their creditors within the mandated 30-day period, (a) the National Treasury has conducted a detailed quantitative and qualitative assessment of the resultant socio-economic ramifications, specifically the adverse impact on job losses and business viability for small companies, sole proprietors and cooperatives; if not, why not; if so, what are the relevant details of the (i) assessment and (ii) strategic measures under consideration to rectify the systemic issue?

Reply:

Payments not made within 30 days are in breach of the Municipal Finance Management Act and the oversight over compliance to laws and regulations is that of the Municipal Council. Therefore, the questions should be directed to the respective municipalities as these relate to contractual obligations entered between municipalities and their respective service providers.

The National Treasury has not conducted research or an assessment on the adverse impact of late payments. The Department of Small Business Development has a mandate to promote and develop Small, Micro and Medium Enterprises (SMMEs). It is therefore suggested that the Honourable Member directs this enquiry to them.

04 October 2023 - NW2710

Profile picture: Faber, Mr WF

Faber, Mr WF to ask the Minister of Finance

(1)(a) What is the position of the National Treasury on the BRICS nations’ proposal to introduce a new currency for cross-border trade and (b) how will this proposal impact the Republic’s economic relations with other countries, particularly the United States (US); (2) given the potential impact of a new BRICS currency on the economic relations of the Republic with the US, what steps will the Government take to ensure that its participation in this initiative does not negatively affect its existing trade relationships with the US and the European Union countries?

Reply:

  1. (a) & (b)

There is no official proposal to introduce a new BRICS currency at this point.

The current discussion on facilitating trade and finance amongst the BRICS members is captured in the Johannesburg Declaration where BRICS Leaders highlighted the following:

We stress the importance of encouraging the use of local currencies in international trade and financial transactions between BRICS as well as their trading partners. We also encourage strengthening of correspondent banking networks between the BRICS countries and enabling settlements in the local currencies. We task our Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms and report back to us by the next Summit.

In the BRICS Finance Track, Finance Ministers and Central Bank Governors will resume discussions regarding the instruction from the leaders to explore payment instruments and infrastructure of using local currencies for enhance trade.

2. As stated before, BRICS countries are not establishing a BRICS common currency.

To date, the United States and the European Union remain one of the largest trading partners of South Africa. South Africa trade relations with the United States and the European Union are governed by existing trade agreements with these trading partners. Any changes in the trade agreements are negotiated and agreed between the two countries.

04 October 2023 - NW2922

Profile picture: George, Dr DT

George, Dr DT to ask the Minister of Finance

(1)Whether, with regard to the cost-of-living crisis that is currently exhibited most notably by the upward spiralling high food prices that are squeezing the average South African household, he intends to reconsider the position he outlined during questions for oral reply on 21 September 2022 in respect of the proposal by a certain political party (details furnished) to expand the zero-VAT rated basket of food items as a direct intervention; if not, why not; if so, what are the relevant details; (2) with regard to the announcement made by the Minister in The Presidency, Ms K P S Ntshavheni, that the Economic Cluster has been instructed by the President to develop a food security plan of action, what action is being taken by the National Treasury to relieve food insecurity of households in the Republic?

Reply:

  1. The position of the Minster has not changed since the last oral reply. As indicated then, zero-rating of specific foodstuffs provides a larger proportional benefit to the poor (i.e. progressivity is enhanced). Overall, goods have a progressive impact and a strong equity-gain ratio – poor people consume a relatively high share of zero-rated items. Nevertheless, the analysis of the independent panel in 2018 indicated that extending zero-rating to further food items would be inefficient, since high-income households tend to benefit more from such measures.
  2. We acknowledge the importance of the agricultural sector in tackling the issue of food insecurity which can both be addressed by increasing availability of food and affordability of food. National Treasury provides fiscal support to departments to support the agricultural sector. The fiscal support for agricultural sector is determined through the budget allocations to the Department of Agriculture, Land Reform and Rural Development, as articulated in the Estimate of National Expenditure (ENE) -Vote 29 and to provinces though the Division Revenue Act, and this information is available in various provincial budgets.
  3. Consolidated spending allocations for agriculture and rural development, as presented in the 2023 Budget, are R27.8 billion in 2023/24, R28.6 billion in 2024/25 and R29.9 billion in 2025/26.

04 October 2023 - NW2918

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

Whether the Government has run out of money; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

Government is working to manage public finances in a prudent and sustainable manner. This includes appropriately responding to the materialization of risks, include unforeseen economic and financial conditions. To be clear, the Government has not run out of money. Government publishes the "Statement of the National Government’s Revenue, Expenditure, and Borrowing" monthly, available on the National Treasury website. This statement provides detailed information into government revenue collections, expenditure and borrowing.

Revenue collections for the first four months of 2023/24 have performed below expectations, primarily due to under-collections in corporate income tax and higher VAT refunds. Therefore, the main budget deficit for the first four months of 2023/24 is higher than expected.

Compared to the 2023 Budget, the economic and revenue outlook has deteriorated, and tighter financial conditions have constrained government’s borrowing programme and led to higher borrowing costs. Government remains committed to prudent fiscal management and addressing these challenges to ensure the financial stability of the nation.

04 October 2023 - NW2908

Profile picture: Abraham, Ms PN

Abraham, Ms PN to ask the Minister of Finance

Whether he intends to continue financing and expanding public employment programmes such as the Expanded Public Works Programme and the 2021-22 Presidential Employment Stimulus programme over the medium-term expenditure framework; if not, why not; if so, what are the relevant details?

Reply:

Considerations for continued financing and expanding of public employment programmes such as the Expanded Public Works Programme and the Presidential Employment Stimulus programme are part of such the budget process, and the outcome of this process will be announced in the 2023 Medium Term Budget Policy Statement.  

04 October 2023 - NW2742

Profile picture: Chetty, Mr M

Chetty, Mr M to ask the Minister of Finance

(a) What total amount did (i) the National Treasury and (ii) each entity reporting to him pay for printed copies of the integrated annual reports in the (aa) 2020-21, (bb) 2021-22 and (cc) 2022-23 financial years, (b) who were the suppliers in each case and (c) what total number of copies of the report were printed (i) in each case and (ii) in each specified financial year?

Reply:

(i) NATIONAL TREASURY

Financial years

(a) Total amount

(b) Name of supplier

(c) Total number of copies printed

(aa) (i)(ii) 2020-21

The Annual Report was not printed.

(bb) (i)(ii) 2021-22

R87 845,28

Lebone Litho Printers

120

(cc) (i)(ii) 2022-23

Not in printing process yet.

(ii) ENTITIES

1. Accounting Standards Board (ASB)

From the Accounting Standards Board

We do not print our Annual Report/Integrated Report/Annual Financial Statements. All our reports are made available electronically.

2. Co-operative Banks Development Agency (CBDA)

Reference

Financial Year

Amount Paid

Copies

Supplier

2742(a)(aa)

2020-21

Nil

Nil

Not Applicable

2742(a)(bb)

2021-22

Nil

Nil

Not Applicable

2742(a)(cc)

2022-23

Nil

Nil

Not Applicable

3. Development Bank of Southern Africa (DBSA)

4. Financial Intelligence Centre (FIC)

(a) (ii) (aa) 2020-21 – R0

(bb) 2021-22 – R0

(cc) 2022-23 – R0

(b) Not applicable

(c) (i) and (ii) Not applicable. The Financial Intelligence Centre did not produce printed copies of its annual reports in the 2020-21, 2021-22 and 2022-23 financial years.

5. Financial Sector Conduct Authority (FSCA)

(a) The total amount (ii) Financial Sector Conduct Authority (FSCA) printed copies of the annual reports in;

(aa) 2020 – 2021: 150 total copies

RP292/2021

ISBN: 978-0-621-49765-6

Title of Publication: Annual Report 2020/2021 Financial Sector Conduct Authority (FSCA)

Printing costs: R44 676.35

Supplier: Shereno Printers

(bb) 2021 –2022: 150 total copies

RP282/2022

ISBN: 978-0-621-50641-9

Title of Publication: Annual Report 2021/2022 Financial Sector Conduct Authority (FSCA)

Printing costs: R47 356.93

Supplier: Shereno Printers

(cc) 2022 – 2023: 150 total copies

RP249/2023

ISBN: 978-0-621-51379-0

Title of Publication: Integrated Report 2022/2023 Financial Sector Conduct Authority (FSCA)

Amount spent: R34 859.59

Supplier: Blackmoon

NB: The 2022/2023 report has not been printed. The figures provided are based on the quotation received from the service provider.

5. Government Employees Pension Fund (GEPF)

7. Government Pensions Administration Agency (GPAA)

(i) Not Applicable to the GPAA

(ii) The table below sets out the amount the GPAA paid for printed copies of the integrated annual reports, the utilised service provider and printed the number of copies in the respective years:

Financial Year

Service Provide

Number of Copies

Amount

(aa) 2020-21

Ulutsha Communication

200

R30 000.00

(bb) 2021-22

Ulutsha Communication

500

R77 250.00

(cc) 2022-23

No expenditure incurred to date

8. Government Technical Advisory Centre (GTAC)

(aa) R17908.95, 40 copies printed.

(bb) R10519.05, 25 copies printed.

(cc) R0, no copies printed.

(b) Grounded Media supplied printed copies in each case.

(c) 65 copies were printed in total.

(i) 40 copies printed in (ii) 2020-21 and 25 copies in 2021-22. No copies have been printed in 2022-23.

9. Independent Regulatory Board for Auditors (IRBA)

A close-up of a logo

Description automatically generated

A black text on a white background

Description automatically generated

10. Land and Agricultural Development Bank of South Africa (Land Bank)

  1. Land Bank has not printed Integrated Annual Reports for FY2020-21, FY2021-22, and FY2022-23. The Bank has only produced electronic versions of the Integrated Annual Reports for the specified period.
  2. Land Bank did not procure any suppliers for the printing of the Integrated Annual Reports.
  3. No Integrated Annual Reports were printed by the Bank.

11. Office of the Ombud for Financial Services Providers (FAIS Ombud)

Integrated Reports:

The FAIS Ombud has incurred no expenditure with respect to Integrated Annual Reports for the financial periods 2020-21 to 2022-23.

Annual Reports:

Annual expenditure incurred by the Office on the publication of annual reports for the financial periods 2020-21 to 2022-23 is as follows:

NO

Financial Period

Service Provider

No. of Copies

Amount

1.

2020-21

Lebone Litho Printers

150

R54,353.45

2.

2021-22

Litha Communications

150

R96,340.68

3.

2022-23

Lezmin 2771 CC

50

*R83,317.60

         

* Amount as per signed purchase order. As at 4 September 2023, the payment for the 2022-23 annual report has not been processed.

12. Office of the Pension Funds Adjudicator (OPFA)

 Question

2020-21(aa)

2021-22(bb)

2022-23(cc)

(a)

R112 299.62

R99 690.05

R122 245.00

(b)

Broadsword Communication

Broadsword Communications

Seriti Printing Digital

(c)

100 printed copies (Including design and editing)

100 printed copies (Including design and editing)

100 printed copies (Including design and editing)

13. Office of the Tax Ombud (OTO)

14. Public Investment Corporation SOC Ltd (PIC)

(a)(ii)

(aa) 2020/21 Book one: Integrated Annual Report at a cost of R84 500 (excluding VAT); and Book two: Annual Financial Statements at a cost of R55 643.50 (excluding VAT).

(bb) 2021/22 Book one: Integrated Annual Report at a cost of R93 705 (excluding VAT); and Book two: Annual Financial Statements at a cost of R65 015 (excluding VAT).

(cc) 2022/23 Book one: Integrated Annual Report at a cost of R131 400 (excluding VAT); and Book two: Annual Financial Statements at a cost of R58 200 (excluding VAT).

(b)

(b) Msomi Africa Communications was the supplier for all three of the above-mentioned financial years.

(c)

(i) and (ii)

2020/21 700 copies printed

2021/22 500 copies printed

2022/23 800 copies printed

15. Sasria SOC Ltd

2020-2021: R29,500-00 (Exl VAT); Msomi Africa Communication (PTY) Ltd; 100 printed copies [R295-00/copy]

2021-2022: Quoted R11,800-00 (Exl VAT); Msomi Africa Communication (PTY) Ltd; 30 printed copies [R393-33/copy]

2022-2023: Not yet finalized

16. South African Revenue Service (SARS)

a) (ii) (aa) (bb) (cc) SARS did not print annual reports for the 2020 – 2021 financial years. The annual report was only printed for the 2022-23 financial year at the total amount of R140 000.

b) The supplier who was appointed for SARS annual report printing is Shereno Printers.

c) (i) (ii) The total number of copies that were printed was 250 for the 2022-23 financial year.

04 October 2023 - NW3129

Profile picture: Mafanya, Mr WTI

Mafanya, Mr WTI to ask the Minister of Finance

Noting that in its ruling the Constitutional Court stated that section 2 of the Preferential Procurement Policy Framework Act, Act 5 of 2000, (PPPFA) allows organs of state to formulate their own regulations and further clarified that the power of the Minister to make regulations does not override section 2, what are the reasons that he has not liberated the stateowned companies to make their own regulations instead of forcing them to comply with the PPPFA regulations of 2022?

Reply:

Section 5 of the Preferential Procurement Policy Framework Act (Act No. 5 of 2000 – “the Act”) states that the Minister may make regulations regarding any matter that may be necessary or expedient to prescribe in order to achieve the objects of this Act. The judgement of the Constitutional court was that the impugned regulations 3,4 and 9 of the 2017 Regulations amounted to determining preferential procurement policy which was the responsibility of the organ of state in terms of Section 2(1) of the Act. The Minister made the Preferential Procurement Regulations 2022 in line with the Constitutional Court judgement to prescribe what is necessary or expedient in order to achieve the objects of the Act.

It is important to note that the Constitutional Court did not rule that State-Owned Companies can make their own regulations as that would be going against what the Act provides, but it did rule that each organ of state is empowered to determine its own preferential procurement policy (in terms of section 2(1) of the Act) and that these policies must still comply with the Act, which includes the 2022 Regulations.

04 October 2023 - NW2619

Profile picture: Montwedi, Mr Mk

Montwedi, Mr Mk to ask the Minister of Finance

What is the total number of transactions that have been concluded since the launch of the blended finance with the Landbank in October 2022, (b) for which commodities were the transactions and (c) what are the reasons that there have been delays in finalising incomplete transactions, including those of acquiring livestock farms?

Reply:

a) What is the total number of transactions that have been concluded since the launch of the blended finance with the Land Bank in October 2022?

The total number of approved transactions as at 31 Aug 2023: 71

Total value of approvals as at 31 Aug 2023: R591.3 million (R279.9 million of loans, and R311.4 million of grants)

Total disbursements amount as at 31 Aug 2023: R153 million (R77 million of loans, and R76 million of grants)

b) For which commodities were the transactions?

Commodities of Approved Transactions as at 31 August 2023

Avocados

Nuts (Macadamia and pecan nuts)

Bananas

Poultry

Dry Beans

Raisins

Citrus

Sugarcane

Grains and Oilseeds

Table Grapes

Livestock (Red meat)

Vegetables

 

(c) What are the reasons that there have been delays in finalising incomplete transactions, including those of acquiring livestock farms?

(i) Reasons for delays in finalizing applications

1. Clients not submitting all the required application information simultaneously. The quality and accuracy of business and financial information contributes to the waiting time during which the processing of the transactions are paused until all the critical information is submitted.

2. Applications not viable and financial projections indicative of the business’s inability to service the loan – at times this leads into the submissions being reworked by the clients.

3. Lack of adherence to environmental and regulatory requirements such as environmental impact assessments, sufficient water volumes and water licenses. These issues generally take long to resolve, and are handled externally by the client through the relevant government departments. The application cannot be finalised without these matters being confirmed.

4. Poor credit records where clients need to resolve defaults and judgements prior to the application being taken forward.

5. Insufficient grazing capacity or applications with overgrazing where access to additional parcels of land are not easily accessible. The application will therefore be delayed as a result.

6. Intermittent capacity constraints and high volume of applications. Some of the Bank’s provincial offices were constrained to turn the transactions around at speed due to vacancies that are currently being field.

(ii) Delays in processing disbursements

  1. Delays in clients meeting the funding conditions which need to be fulfilled prior to disbursement of funds. These include the following:
    1. Delays experienced in clients obtaining licences for additional water rights from the Department of Water and Sanitation.
    1. Delays in obtaining the condition for provision of DALRRD’s written consent to cede all and any of the rights of the Borrower under the 30-year lease agreements.
    1. There are often delays where the client is required to provide Life Cover / Credit Life as clients undergo medical examination, and in some instances the clients may not qualify.
    1. The conversion of letters of intent to the required off-taker agreements may take longer to obtain.
    1. Title deeds in some of the provinces have restrictive clauses on selling to external buyers that are not from the location.