Mail & Guardian article on Department of Small Business Development underspending

Today's Mail & Guardian published an article on page 17 claiming the Department of Small Business Development will underspend its 2016/17 budget by R140 million, more than 10% of its budget.

M&G journalist Dineo Bendile called me on Tuesday requesting comments on the story, which I willingly provided. The article quotes a short segment of what I sent her and there is an unexplained discrepancy between the actual and claimed year-to-date under-spending. She did not reveal her source for the under-spending claim, only referring to them as "Treasury officials".

Minister Zulu wants her budget substantially increased, so it seems these un-named Treasury officials are waging a behind-the-scenes battle with her based on the Department's inability to spend what it's already been allocated. The issue is not just the spending, but how it's spent. Does it produce results?

For the record, this is what I sent Dineo:

"The Department presented its 2nd quarter report (July-September 2016) to the Portfolio Committee on December 7th in Parliament. At that stage the Department had spent 46,6% (R618 million) of its budget for the year, which is R1,325 billion. I cannot confirm whether the Department has underspent by R140 million for the full year ending March 31st, because it has not reported its 3rd quarter and will only report its full year results in June. 

However, if the year to date spending trend continues (R45 million underspend in the half year) then I would not be surprised if that figure of R140 million - representing over 10% of its budget - is reached for the full year.

The Department is struggling to establish itself as evidenced by the fact that it had a 17% vacancy rate as of September 2016, including two Deputy Director Generals and several Chief Director and Director positions - these have still not been filled. 

I do not accept Minister Zulu's excuse that the Department is still new - it has been operational for two and a half years. It did only achieve full independence from its mother department, the DTI, in April 2016 but a year has passed since then.

Key functions in the Department are under-capacitated, in particular Monitoring and Evaluation (M&E) which is vital to ensure spending and programmes remain on target and key performance indicators are met.

At last week's Portfolio Committee meeting the DG, Edith Vries, failed to present the Department's Cooperative Incentive Scheme performance to date, admitting that less than half of the approximately 400 cooperatives funded to date had been visited to establish if they were still functioning (see my earlier blog post ).

I understand the Department has requested an extension before presenting its 3rd quarter report, which is due to come before Committee next Wednesday 15th March. This could be an indication of further trouble to come."

At Wednesday's Portfolio Committee meeting the Chair, Ruth Bhengu, confirmed that the Department would not present its 3rd quarter report because the Committee would not be sitting. She and I are attending the Global Entrepreneurship Congress in Johannesburg which is a convenient reason for postponing the report. We will now not receive it until the end of April at the earliest, as Parliament rises next Thursday for a month.

What is Minister Zulu and her underspending Department trying to hide?

Next week's GEC is a huge international platform for Minister Zulu and South Africa. But what she did not envisage when she and the City of Joburg bid for the event was that voters would kick out then-ANC Mayor Parks Tau in the 2016 local government elections. On Tuesday the ANC's arch-nemesis, DA Mayor Herman Mashaba, will welcome 5 000 guests from all over the world to the Congress and present a very different vision of how government should be, and is, supporting entrepreneurs.

On Tuesday Minister Zulu has a big pill to swallow. Bigger even, perhaps, than her failure both to spend her budget and persuade Treasury to give her more.

Roll on the 2019 general election and an even bigger pill for Minister Zulu to swallow, and hopefully choke on!