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Department of Appropriations Report on Growing KwaZulu-Natal Together

The Department of Appropriations presents a comprehensive report on the adjustments appropriation bill, focusing on spending trends, efficiencies, ASIDI and SAFE initiatives, electricity and water provision to schools, pit latrines, project plan roll-overs, the reduction of the EIG, legal impediments, and recommendations for economic transformation. The report includes details on budget expenditure, progress on infrastructure improvement projects, and measures to address challenges in education infrastructure funding. The report also discusses electricity provision to schools and ongoing maintenance works.

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Department of Appropriations Report on Growing KwaZulu-Natal Together

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  1. STANDING COMMITTEE ON APPROPRIATIONS ON THE ADJUSTMENTS APPROPRIATION BILL (B34-2023) 29 NOVEMBER 2023 GROWING KWAZULU-NATAL TOGETHER 1

  2. TABLE OF CONTENTS 1. INTRODUCTION & BACKGROUND 2. PURPOSE OF THE PRESENTATION 3. SPENDING TRENDS 4. SPENDING INEFFICIENCIES 5. ASIDI & SAFE INITIATIVES (PART OF DBE REPORT) 6. ELECTRICITY & WATER PROVISION TO SCHOOLS 7. PIT LATRINES 8. PROJECT PLAN ROLL OVERS (PART OF DBE REPORT) 9. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS 10. LEGAL IMPEDIMENTS 11. RECOMMENDATIONS 2 2 GROWING KWAZULU-NATAL TOGETHER

  3. INTRODUCTION  The Department received the letter from the Standing Committee on Appropriations dated 14thNovember 2023.  The Letter requested that the Department provides:  Synoptic report on the spending trends for the past five years, including the department’s plan to curb spending inefficiencies as per previous AG’s audit outcomes.  A detailed report on the utilisation of the ASIDI initiative to improve schools’ infrastructure in the Province. The report must include the total number of mud schools, schools without water and electricity, schools that are still using pit latrines and the reason why the deadline for the eradication of pit latrines keeps on shifting in the Province. 3 3 GROWING KWAZULU-NATAL TOGETHER

  4. INTRODUCTION  Clear Project Plan to utilize the monies from the roll-overs to complete the outstanding ASIDI initiative in the Province.  Provide the Committee with a detailed report on the impact of the proposed baseline reduction on the Education Infrastructure Grant, including measures to mitigate such impact.  Overview on any legal impediments to the Department achieving economic transformation and if yes, provide proposals in this regard. 4 4 GROWING KWAZULU-NATAL TOGETHER

  5. PURPOSE OF THE PRESENTATION  This presentation seeks to provide responses requested by the Standing Committee on Appropriations as indicated on their letter dated 14thNovember 2023.  It should however be noted that responses on DBE led Programmes are included in the DBE report. This include the reports on ASIDI, SAFE, Roll-overs attached to ASIDI and the Legal Impediments. 5 5 GROWING KWAZULU-NATAL TOGETHER

  6. SPENDING TRENDS: PAST FIVE YEARS  The Table below indicates the Departmental Expenditure Trends over the past five (5) Financial Years. FINANCIAL YEAR ORIGINAL BUDGET ADJUSTED BUDGET ACTUAL EXPENDITURE PERCENTAGE EXPENDITURE 2018/2019 1 866 435 000 2 016 435 000 2 017 603 791 100,06% 2019/2020 2 187 162 000 2 287 162 000 2 287 986 887 100,04% 2020/2021 1 996 182 000 1 922 645 592 1 922 645 592 100.00% 2021/2022 2 120 492 000 2 325 614 000 2 325 614 000 100,00% 2022/2023 2 387 952 000 2 483 015 000 2 483 015 000 100,00% NOTE: The Budget Cut amounting to R497.218 million was effected in the 2020/21 Financial Year.  The Department has been spending its budget entirely during the past five financial years. 6 6 GROWING KWAZULU-NATAL TOGETHER

  7. SPENDING INEFFICIENCIES  The AG Final Management Report for the 2022/23 Financial Year Audit indicated that there no significant shortcomings in the management of the Grant (Item 43, Page 10).  There was no spending inefficiencies that were identified and indicated in the AG audit outcomes. 7 7 GROWING KWAZULU-NATAL TOGETHER

  8. ELECTRICITY PROVISION TO SCHOOLS  The Department has provided electricity to all Schools in the Province.  Where there is no provision of electricity from the National Grid, the Department provided alternative sources of electricity that includes solar panels and generators.  The Department is currently undertaking Electrical Upgrades and Maintenance works to various Schools.  Table below shows the Schools per District that are under implementation for the Electrical Upgrades and Maintenance Works in the 2023/24 Financial Year.  The Electrical connections at these Schools would have either deteriorated and therefore require maintenance or would have been subjected to vandalism and theft of cables, conducting and accessories. 8 8 GROWING KWAZULU-NATAL TOGETHER

  9. ELECTRICITY PROVISION TO SCHOOLS No. DISTRICT PRE-CONSTRUCTION STAGE COMPLETED TOTAL 1 AMAJUBA 0 0 0 NOTE: Procurement for the projects on pre-construction stage commenced. These will be completed before the end of the Financial Year. 2 HARRY GWALA 1 0 1 3 ILEMBE 0 0 0 has 4 KING CETSHWAYO 8 0 8 5 PINETOWN 0 0 0 projects 6 UGU 4 0 4 7 UMGUNGUNDLOVU 0 0 0 2023/24 8 UMKHANYAKUDE 1 4 5 9 UMLAZI 0 0 0 10 UMZINYATHI 5 0 5 11 UTHUKELA 0 2 2 12 ZULULAND 4 2 6 TOTAL 23 10 33 9 9 GROWING KWAZULU-NATAL TOGETHER

  10. ELECTRICITY PROVISION TO SCHOOLS No. DISTRICT NO. & NAMES OF SCHOOLS  The Department furthermore, 1 AMAJUBA 1 (Dannhauser Primary School) received donators of 2 HARRY GWALA 1 (Vulekani Special School) approximately 14 Generators 3 ILEMBE 1 (Our Lady of the Rosary School) 4 KING CETSHWAYO 1 (Thembimfundo Special School) from the Chinese Embassy in 5 PINETOWN 1 (Sacred Heart Secondary School) South Africa. 6 UGU 1 (Schola Amoris)  The Generators are earmarked 7 UMGUNGUNDLOVU 2 (Newton High School & Open Gate Special School) to be installed at Boarding 8 UMKHANYAKUDE 1 (Intuthuko Special School) Schools that does not have 9 UMLAZI 1 (Mason Lincon) back-up power. 10 UMZINYATHI 1 (Sihayo High School)  These generators will be 11 UTHUKELA 1 (Inkanyezi Special School) distributed to as follows: 12 ZULULAND 2 (Impumelelo High School & Nkosiyethu Primary School) TOTAL 14 10 10 GROWING KWAZULU-NATAL TOGETHER

  11. WATER PROVISION TO SCHOOLS  The main sources of water supply to Schools are as follows: Municipal reticulation, Tankering by District Municipalities and Boreholes.  All Schools were provided with water tanks which act as water reservoirs at Schools.  The Department is implementing the Borehole Programme. This is set to reduce the cost and number of Schools reliant on Tankering by District Municipalities as the only source of water supply. The status of this Programme is as follows: No. DISTRICT NUMBER OF SCHOOLS 1 COMPLETED 620 2 CONSTRUCTION STAGE 218 3 PRE-CONSTRUCTION STAGE - TOTAL 838 NOTE: The 218 projects under construction will be completed before the end of the 2023/24  Financial Year. 11 11 GROWING KWAZULU-NATAL TOGETHER

  12. PIT LATRINES  The current status for the Eradication of Pit Latrines is as follows: NO. STATUS NO. OF SCHOOLS 1 COMPLETED 1 263 2 CONSTRUCTION STAGE 60 3 DESIGN DOCUMENTATION STAGE - 4 DESIGN DEVELOPMENT STAGE - 5 CONCEPT & VIABILITY STAGE - 6 INITIATION STAGE - 7 CLOSED & NON-VIABLE 54 TOTAL 1 377  The Department initially identified 1 377 Schools to be having pit latrines.  60 Schools are currently being eradicated. Construction is at various stages. 12 12 GROWING KWAZULU-NATAL TOGETHER

  13. PIT LATRINES  The 62 Schools on Construction Stage are anticipated to be completed as follows: NO. CONSTRUCTION STATUS NO. OF SCHOOLS ANTICIPATED COMPLETION DATE 14 December 2023 1 76 – 99% 38 2 51 – 75% 14 31 January 2024 3 26 – 50% 4 28 February 2024 4 1 – 25% 4 31 March 2024 TOTAL 60  The changes to the deadline date for the eradication of pit latrines is due to various operational challenges. These include: Disruptions by Business Forums and Local Communities  Insufficient Budget.  The effect of the Covid-19 National Shutdown and on Contractor and Professional  Service Providers capacity. Community Protests and Unrest  13 13 GROWING KWAZULU-NATAL TOGETHER

  14. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS: 2023/24 FY  The Budget Cut being effected in the 2023/24 Financial Year is R296 371 000 (10.1%).  This Department has effected this Budget Cut in the Refurbishment, Renovations and Rehabilitation (R&R) Programme as shown on the Table below. NO. PROGRAMME ORIGINAL ALLOCATION BUDGET CUTS ADJUSTED ALLOCATION PERCENTAGE (%) 1 New / Replacement Schools R126 910 000 R0 R126 910 000 0% 2 Upgrades & Additions R891 697 000 R0 R891 697 000 0% 3 Refurbishment & Rehabilitation R1 378 121 000 R296 371 000 R1 081 750 000 22% 4 Maintenance R473 499 000 R0 R473 499 000 0% 5 Non Infrastructure R64 523 000 R0 R64 523 000 0% TOTAL R2 934 750 000 R296 371 000 R2 638 379 000 10.1% 14 14 GROWING KWAZULU-NATAL TOGETHER

  15. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS: 2023/24 FY  The main contributor to this Programme is the Rehabilitation to Storm Damaged Schools, Flood Damaged Schools, Schools with Asbestos and School with Civil and Structural Defects.  These projects will thus not reach construction stage nor be completed in the 2023/24 Financial Year.  Table below shows an indication of the project pipeline for the R&R Programme that is inclusive of the Storm Damaged Schools.  The Table shows that there are 373 projects on Stages 3 and 4 under the R&R Programme. Professional Service Providers were already working on tender documentation and preparing to go out on tender on these Schools.  The impact of these Budget Cuts means that these 373 projects will not proceed to construction stage.  The projects could have been implemented and completed in the current financial year. 15 15 GROWING KWAZULU-NATAL TOGETHER

  16. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS: 2023/24 FY R&R PROGRAMME PIPELINE NO. PROJECT STAGE NO. OF PROJECTS 1 Design Development Stage (Stage 3) 300 2 Design Documentation Stage (Stage 4) 73 TOTAL 373 16 16 GROWING KWAZULU-NATAL TOGETHER

  17. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS: 2024/25 FY DEPARTMENT’S INFRASTRUCTURE PROJECTS PIPELINE  The Department implements various Infrastructure Programmes.  These Programmes include New / Replacement Schools, Upgrades and Additions, Refurbishment & Rehabilitation (R&R) and the Maintenance and Repairs.  The Department’s Infrastructure Projects Pipelines shows that the 105.87% of the adjusted Budget is contracted and committed to projects already on construction stage, Practical & Final Completion Stages. These projects are at various stages as indicated and covers all Programmes.  The funding for the projects on construction stage is directly affected by budget allocations in the 2024/25 Financial Year MTEF.  The second highest contribution are projects on Stage 4 (Design Documentation Stage) at 3.22% whilst projects on Stage 3 (Design Development Stage) account for 1.07%.  The Department is therefore forced with the risk of over expenditure in the 2024/25 FY. 17 17 GROWING KWAZULU-NATAL TOGETHER

  18. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS: 2024/25 FY No. DESCRIPTION STATUS No. OF PROJECTS BUDGET ALLOCATION (2023/24 FY) %AGE 1 Initiation 260 0 0% 2 Concept & Viability 177 0 0% 3 Design Development 583 22 490 748.51 1.07% 4 Design Documentation 199 67 472 245.55 3.22% Site Handover 32 1 – 25% 166 5 Construction 26 – 50% 177 51 – 75% 42 2 220 286 005.94 105.87% 76 – 99% 28 6 Packaged Projects 18 7 Practical Completion 53 8 Final Completion 16 EIG BUDGET ALLOCATION AFTER BUDGET CUT 1751 2 097 224 100.00 110.16% BUDGET CUT IN 2024/25 FY (10%) 233 024 900.00 EIG BUDGET ALLOCATION FOR 2024/25 FY BEFORE BUDGET CUT 2 330 249 000.00 18 18 GROWING KWAZULU-NATAL TOGETHER

  19. IMPACT OF THE REDUCTION OF THE EIG & MITIGATIONS: 2024/25 FY  In the 2024/25 FY, the Department facing a risk of over expenditure of 10.16% .  In order to minimise or abet the risk of over expenditure, the Department will implement the following measures;  Not introduce new projects into construction stage on all Programmes,  Not able to react to storm damages including not being able to provide interim measures (provision of mobile classrooms and mobile toilets where required),  The Department would be required to strictly:  Control, manage and monitor cash flows and progress on site,  Regular engagement with Implementing Agents,  Provision of concurrence for projects to be advertised and to be awarded,  Monitor Implementing Agent, Contractor and other Stakeholders performance. 19 19 GROWING KWAZULU-NATAL TOGETHER

  20. RISKS  The Budget Cuts will expose the Department to the following risks:  Service Delivery Protests by local communities.  Compromised teaching and learning environment at Schools.  The Department will not meet its job creation and SMME development targets.  Postponement of delivery timelines set for Programmes.  The Department is likely to have a higher accruals amount and this will have a ripple effect of negatively affecting the budget for the 2025/26 FY. 20 GROWING KWAZULU-NATAL TOGETHER 20

  21. LEGAL IMPEDIMENTS  The following Legal Impediments are likely to be faced by the Department:  Litigation by Pressure Groups due to the non-compliance of Schools to Norms and Standards. These Pressure Groups include Human Rights Groups, Section 27, Equal Education to mention a few.  Litigation by Service Providers due to anticipated late payments. This will also led to service providers charging interest on late payments. Interest on late payments constitute fruitless and wasteful expenditure and this will attract negative Audit outcomes by the Auditor General. 21 GROWING KWAZULU-NATAL TOGETHER 21

  22. RECOMMENDATION  It is recommended that the Standing Committee on Appropriations notes: The contents of the report  That other issues that the Department was requested to respond on were covered in  the presentation by the DBE. These include the ASIDI, SAFE, Roll-overs on ASIDI and the Legal Impediments. The mitigatory mesures that the Department will implement in order to manage the  effect of the Budget Cuts, The potential risks the Budget Cuts on the EIG would have in the communities.  22 22 GROWING KWAZULU-NATAL TOGETHER

  23. THANK YOU

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