Special Cabinet press statement

5 Dec 2011

Cabinet convened a special meeting today, 5 December 2011

1. National Government intervenes in Free State, Gauteng and Limpopo provinces

Cabinet has been concerned about the state of financial management and governance in certain provinces for some time. Cabinet has received reports on trends in provincial under spending, overspending and challenges with supply chain management.

The three provinces affected in varying degrees are Limpopo, Free State and Gauteng, the synopsis is as follows.

1.1 Limpopo province

At the Cabinet meeting of 23 November 2011 the Minister of Finance reported on the request received by National Treasury from the Province of Limpopo for the approval of an additional overdraft facility.

Limpopo experienced a cash crisis two weeks ago. They used up their R757,3 million overdraft facility with the Corporation for Public Deposits (CPD). The CPD is the subsidiary of the South African Reserve Bank which facilitates banking arrangements that national, provincial governments and state owned entities have with the Reserve Bank within which they inter-lend to each other with the approval of the National Treasury. Limpopo had requested that their facility should be increased  by R1 billion (to R1,7 billion) from the National Treasury for the province to pay salaries and wages on  23 November 2011. This request was declined but alternative arrangements were made for an early transfer (two days before the actual date of transfer) of their equitable share in order to be able to pay salaries.

The Minister of Finance was asked by Cabinet to urgently review the situation in Limpopo and other provinces and report back to Cabinet on proposed actions to be taken to improve the financial situation and its impact on service delivery and provincial functions.

1.2 Gauteng and Free State

Furthermore, Gauteng and Free State provinces requested assistance from the National Treasury. Gauteng requested assistance to address the challenges in the Health Department while the Free State identified Financial Management and non-compliance to Supply Chain Management processes in their Police, Roads and Transport department as issues that needed urgent attention.

The National Treasury and other relevant national departments have been engaging with various provincial departments over time with a view to assisting in improving financial management and service delivery. However, while some provinces have taken appropriate actions, the situation remains unsatisfactory.

Having considered the current situation in some of the provinces, Cabinet today decided that:

• Limpopo Provincial Government be placed under a section 100 (1) (b) intervention of the Constitution;
• Free State be placed under section 100 (1) (a) intervention of the Constitution;
• Gauteng Premier signs an agreement with the Minister of Health and the Minister of Finance to address financial management challenges in the Department of Health in Gauteng province and other matters;
• Forensic investigations with strict timelines be carried out;
• There should be consequences for any illegal conduct or maladministration that may be uncovered in the course of such investigation;
• MECs, HODs, CFOs and any other appropriate official to be replaced by National acting deployees on a case by case basis; and
• Monitoring committee under the leadership of National Treasury and comprised of the following ministries Department of Higher Education and Training, Department of Basic Education, Department of Transport, Department of Health, Department of Public Works, Department of Justice, Department of Public Service and Administration under the chairmanship of National Treasury.  This committee will be empowered to co-opt any other ministry as it deems appropriate.

In the Limpopo province, members of the National Executive will assume responsibility for the following departments in line with section 100 (1) (b);

a) Provincial Treasury;
b) Education;
c) Transport & Roads;
d) Health; and
e) Public Works.

In the Free State province with the agreement of the Premier, directives will be issued in line with section 100 (1) (a) by the relevant members of the National Executive for the following departments:

a) Provincial treasury; and
b) Police/Roads & Transport.

In Gauteng province, the health department has been facing chronic problems with large accruals and other financial issues. The Ministers of Health and Finance will assist the Premier and MEC with:

a) Financial management issues; and
b) Supply chain management issues.

In addition, urgent action will be taken in respect of the Gauteng Shared Services Centre (GSSC).

2. Pending visits by various Heads of State and Government in the New Year

2.1 Cabinet was also informed of the pending arrivals of the various Heads of State in the New Year. These Excellencies have been invited to join the ruling party and indeed the entire South African citizenry in the historical event where the ruling party celebrates its centenary. This event is a celebration of the struggle against apartheid and the history of the Africa's oldest liberation movement. Cabinet recognises that this event provides South Africa a unique opportunity to thank its citizens and the world at large for the role played in bringing about a democratic state.  It is significant to note that the ruling party was the initiator of the struggle for human rights in South Africa long before the United Nations declaration against apartheid. This event also provides South Africa the golden opportunity to trace its historical development upon which our constitution is premised. 

This support for this celebration includes a special resolution by the African Union (AU) and a statement by the United Nations (UN) Secretary-General

The AU resolution urged "member states to view the ANC Centenary celebrations as an African event and undertake activities in solidarity with South Africa in this respect".

UN Secretary General, Ban Ki Moon, has also recognised the ANC as more than just a political party. He said: "It is a movement-and a tangible expression of a vision. The commitment and sacrifice of its members led to the emancipation of a nation from a racist colonial rule. This has always been the movement's strength and it is this vision that the world looks to now. The struggle for freedom, justice, human rights and against racism is a global battle. I see the ANC in the vanguard. Not just in South Africa but throughout the continent and the globe."

Cabinet noted that a number of official International Institutions played a key role in the struggle against apartheid and that they also recognise the importance of the centenary celebration of the ruling party

2.2 Cabinet was informed that the standard protocols applicable to visiting Heads of State and Government will be applicable. 

For all Treasury related enquiries: Bulelwa Boqwana

Statement issued by Jimmy Manyi, Cabinet Spokesperson and CEO of Government Communications (GCIS), December 5 2011

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