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REMARKS BY MR. MANDLA NKOMFE, GAUTENG MEC FOR
FINANCE, ON THE OCCASION OF THE SEMINAR ON BEST
PRACTICES FOR FINANCE AND BUDGET COMMITTEES,
SANDTON, 11 APRIL 2014.
Programme Director
Honourable members of the government of Kenya;
Distinguished guests
GAUTENG: ONE PROVINCE, MANY OPPORTUNITIES!
 I extend the warm greetings of our Government and thank you for
choosing our beautiful province to host this important seminar;
 Indeed Gauteng is the economic hub of South Africa and Africa;
 The province is the single largest contributor to the national economy;
generating more than 34% of the country’s Gross Domestic Product;
 Our Gross Domestic Product by Region is estimated at R811 billion;
 As a result of this when business people ask why they should invest
here we simply say:
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Gauteng is a strong financial and industrial base;
High quality information technology is easily accessible;
We offer outstanding business services;
An enabling environment;
We also have excellent freight and logistics.
 Last but not least, our province has a good quality of life. We are talking
about world class infrastructure, excellent accommodation and
recreational facilities, excellent culinary experience comprising various
African food and drinks. A good night life; and of course friendly people!
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INTRODUCTION
 Fellow Africans, we are indeed heartened by the invitation extended to
us to join you today and share our experience on the important matter
of improving efficiencies in the management of public funds;
 We view this as a topic whose time has come. This is because in two
weeks’ time our country will celebrate 20 years of democracy;
 The celebration of this momentous occasion also gives us time to reflect
on what has been our living experience over the past two decades;
 In our space as the Gauteng Provincial Treasury, our narrative
emphasises the fact that we have come a long way as a country from
the time when public resources were allocated according to racial
classification;
 Today our country has a budgeting system that is world class; we have
achieved allocative efficiency in many key areas, thereby ensuring that
we properly distribute resources towards the fight against inequality,
unemployment and poverty.
 We do this driven by a burning desire to bring about a better life for all
our people – black and white.
REFLECTIONS ON TREASURY
 In this context, our department which is Gauteng Provincial Treasury
prides itself in continuously crafting a budget for the people; one that is
aimed at addressing the social landscape of the province.
 The achievement of this key balancing act guides our approach to
budgeting because it ensures that limited resources are distributed
among competing demands;
 We certainly view our budget process as a tool to demonstrate
government’s commitment to:
 fiscal stability,
 to efficiency, and
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 to delivering services that people want and need
 This institutional framework is necessary for the realisation of
government priorities.
Section 216 of the Constitution states that national legislation must establish a
National Treasury and prescribes measures to ensure both transparency and
expenditure control in each sphere of government by introducing:
 Generally recognised accounting practice.
 Uniformed expenditure classifications.
 Uniform treasury norms and standards.
TRANSITION TO PFMA
 The provision referred to in section 216 of the Constitution, led to the
passing of the Public Finance Management Act (No. 1 of 1999) into
law in 1999.
 Prior to the PFMA, public financial management in South Africa was
regulated through various Exchequer Acts; which were rule driven.
PFMA replaced the Exchequer Act
 The enactment of the PFMA marked the beginning of a period in which
fiscal discipline and operational efficiency was emphasized.
 The other pillar of public expenditure management, allocative efficiency,
was strongly emphasised in the MTEF as a budget reform.
 The enactment of the PFMA was necessary to provide further impetus
to the intergovernmental system and the MTEF.
 PFMA adopted an approach to financial management which focuses on
outputs and responsibilities. The Act was a strategy to improve on the
financial management in public sector.
 Implementation of the Act was to be done in a phased in approach:
 Phase one: basic financial management i.e. Management of
budget
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 Phase two: Efficiency and effectiveness of programmes and
best practice financial management.
Here are some key points to note in relation to these:
Management of Budget
Budget Management should be focused on achieving fiscal discipline
through:
 Development of three-year rolling budgets,
 The synchronization of fiscal and monetary policy, and
 The establishment of intergovernmental fora where political and
administrative consensus was sought on key financing issues.
Effectiveness vs Efficiency
What is effectiveness?
 Effectiveness refers to the total output generated
 Means that the results of effort expended to achieve a goal are
demonstrably successful;
 How well you did
What is efficiency?
 Efficiency is measured in terms of ratio of “output generated”
divided by inputs used in the process – for example, widgets
produced per kilogram of raw material used
 Focuses primarily on the economic utilisation of resources
 Is the best way to do it
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The PFMA requires “measurable objectives” to be formulated for each
main division (i.e. programme) within a vote. In 2001 the Estimates of
National Expenditure was introduced, bringing financial and narrative
performance information together and making a first effort at formulating
measurable objectives and indicators.
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The measurable objectives must provide a clear link between the
programme’s outputs and the department’s goals, and define the actual
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impact on the public rather than focusing on the level of effort that is
expended.
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The ultimate implementation standard by which service delivery and
public finance management should be measured remains those
provisions of the PFMA that require an emphasis on economy,
effectiveness, efficiency and transparency in the use of government
resources.
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An important consequence of the effective, efficient, economical and
transparent use of these resources is the need to learn iteratively (using
financial and non-financial data) about what works and what does not.
CONCLUSION
 The reforms outlined above have contributed to stabilising public policy
delivery, enhanced macroeconomic stability, which has supported
predictability of funding for policy priorities.
 These policies have enabled political involvement in the budget
process, turning it into the most important policy process. This facilitates
the effectiveness of the medium-term budget framework as a
mechanism to link policy making and budgeting.
 There is better linking of policy, spending and delivery, and that policy
co-ordination between the three spheres of government, while still
imperfect, could have been in much worse shape without the reforms.
 Parliament and other non-executive stakeholders in the budget have
access to much better information than before 1997. The available
information covers more of government and the public sector, it is
timelier and its accuracy is improving.
 Although challenges remain, especially in building capacity in public
finance practitioners, we remain committed to working with the National
Treasury to build this area.
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 We further commit to improve inter-governmental fiscal relations system
and improve financial management practices;
 Once again let me express our gratitude for inviting us to this important
gathering;
 Let us continue to share our experiences so that we could build strong
financial management practices in our continent;
 This is crucial for the legitimacy, efficacy and strength of governments
going forward;
 After all prudent financial management is a responsibility that should be
discharged, without fail, by all those that have been entrusted to
perform that task;
 We dare not fail in this regard because our people expect nothing less
from us;
 Thank you very much