Fiscal Renaissance in a Democratic South Africa

South Africa has overcome adverse initial conditions to achieve a remarkable fiscal transformation since the 1994 democratic elections, held amid uncertainty about its ability to maintain the rule of law and resist the populist spending pressures. Constitutionally-bases, durable and credible fiscal reforms have contained spending and rendered policy at all levels of government more transparent and accountable, and more predictable through multi-year budgeting. Extensive tax reform and more efficient tax collection has expanded revenue, permitting lower tax rates for both individuals and companies, and personal tax relief. Fiscal consolidation almost eliminated the budget deficit by 2005, and with improved debt management, has created a lower and more sustainable debt burden. While highly centralised revenue raising powers and greater decentralisation of expenditure to sub-national governments created a vertical fiscal imbalance, a strict no-bail out approach helped control provincial spending. The fiscal-monetary policy mix has stabilised the macro-economy and reduced uncertainty, reflected internationally in narrowed sovereign risk spreads and improved debt ratings. However, micro-service delivery in social expenditure has been disappointing (in some cases due to capacity constraints rather than inadequate fiscal allocations). And long-term decline in infrastructure investment and capital stock is only belatedly receiving attention. The challenge is to increase social and infrastructure expenditure at a sustainable rate and to improve the quality of service delivery, to avoid undermining the gains in microeconomic stability.

An application of the flexible specialisation methodology to the furniture industry in the Western Cape

Bibliography: p. 121-131.The primary aim of this paper is to attempt to apply the flexible specialisation (FS) methodology to the furniture industry in the Western Cape. As described in detail in the following section, the gains from employing this approach include "the conceptualisation of industrialisation as a locally embedded process, and the focus on network and on technological capability as essential elements in this process" (Aeroe, 1992:16). A positive approach is then used to assess which aspects of the Western Cape furniture industry (if any) are similar to the industrial organisational structure which has been termed the small firm variant of FS. The fieldwork for the empirical part of the case study was carried out on a sample of 20 furniture manufacturing concerns drawn from three clusters of furniture enterprises in Epping, Lansdowne and Blackheath. The criterion for the selection of these research areas was the existence of a critical mass of sectorally concentrated firms agglomerated within a geographically compact area. A key objective was to attempt to isolate the influence of the variable "locality" on other variables such as the extent of cooperation, firm performance and strategies and supplier relations, inter alia. Finally the normative implications of this variant are examined. Do features in the Western Cape industrial landscape exist which suggest the potential for development of regional industrial clusters along FS lines? In order to conduct a case study broadly within the FS framework, it is necessary to first review the literature and extract testable hypotheses. Firstly the general literature on the FS small firm variant is reviewed. Then a survey of FS case studies of the furniture/woodworking sector is presented. The next phase is a detailed perspective on the South African furniture industry given as a background to the empirical study which follows

The South African developmental state debate leadership, governance and a dialogue in public sector finance

The Constitution of South Africa, with its progressive realisation of justiciable socio-economic rights, is fundamentally transformative, and places a number of stringent requirements on the public finance management system to support that agenda. Furthermore, within the government and governance parameters set by the Constitution, a number of strategic orientations for the role of the state are possible, including the developmental state, which may place additional requirements on the public finance management system. This paper explores the implications for the public finance management system of the South African government’s aspiration to become a developmental state, as articulated in the newly released National Development Plan 2030: Our future – make it work (South Africa. National Planning Commission 2012). It concludes by delineating an analytical framework through which progress with budget reforms can be assessed, encompassing not only its technical dimensions, but also leadership and governance.ff201

The role of the provincial treasury in driving budget reform in South Africa’s decentralised fiscal system

After the transition to a fully democratic order in 1994, the adoption of the new Constitution of the Republic of South Africa in 1996 prompted the creation and development of a decentralised administrative structure consisting of three distinct, but interrelated and interdependent spheres of government (national, provincial and local government). It also lead to the institution of a long-term budget reform initiative aimed at realising the constitutional ideals of efficiency, effectiveness, equity and development orientation. Significant budgets and expenditure responsibilities were devolved to the provincial governments, which deliver crucial public services such as providing basic education, supplying health services and building and maintaining roads. Provincial treasuries play a crucial role in driving the budget reform process in the subnational spheres, but most budget reform research to date has focused virtually exclusively on the role of the National Treasury. To fill this research void, this article explores the role of provincial treasuries as a critical institutional modality for implementing public financial management reforms in a decentralised fiscal setting. The article reviews the legislative framework for budget reform and the mandate of provincial treasuries as derived from the Public Finance Management Act, 1 of 1999. It assesses the recent performance of provincial treasuries in driving budget reform in the provincial sphere, using national intervention in the Limpopo Provincial Treasury in 2012 as a case study. The article concludes that the large variation in provincial treasury performance and capacity poses a serious risk to the realisation of public financial management reform benefits in South Africa.http://www.assadpam.net/am201

Public financial management reform in South African provincial basic education departments

Since the transition to democracy in 1994, the South African government has engaged in a sustained programme of public financial management (PFM) reform across the national, provincial and local spheres of government. This study evaluates the progress of the nine provincial education departments (PEDs) in implementing the Public Finance Management Act of 1999, and explores the factors which facilitated or impeded reform. A public financial management progress (PFMP) index is constructed to track each PED‘s performance from 1997/98 to 2013/14 and then used to benchmark its progress over time and relative to the education sector as a whole. The indicators comprising the PFMP index assess key PFM functions (budgeting, accounting, financial auditing and audits of performance information), financial leadership and the effectiveness of governance institutions such as audit committees. While there has been considerable progress in PFM, distinct differences in the quality and effectiveness of PFM practices across the nine PEDs remain. Stable top administrative leadership, availability of PFM skills, varying degrees of accountability and departmental capacity to establish PFM systems that conform to new accounting standards drive variances in reform outcomes.http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-162X2018-10-31hb2016School of Public Management and Administration (SPMA

Public financial management reforms for value-for-money in selected South African provincial governments

Far-reaching public financial management (PFM) reforms have been implemented in South Africa in accordance with the Public Financial Management Act, 1999 (Act 1 of 1999) (PFMA). This study assesses the extent to which the PFMA and related reforms have achieved their initial objectives of enhancing value-for-money (the efficiency, effectiveness and equity of public expenditure) in provincial governments between 2000 and 2013. It also generates policy recommendations to enhance the effectiveness of future PFM reform in South African provincial governments. Based on questionnaires administered to a sample of public financial management specialists from the National Treasury, seven of the nine provincial treasuries, and independent experts, a qualitative analysis provides a detailed understanding of factors triggering PFM reform in South Africa since the country s transition to a democratic order in 1994, reform objectives and critical success and risk factors in reform implementation. To benchmark the PFM performance of the provincial Education and Health departments, a Public Financial Management Progress Index (PFMP index) is constructed for each of the nine provincial Education and Health departments for the period from 2007/2008 to 2013/2014, based on annual performance plans, budgets and audited financial statements. Analysis of the PFMP index indicates that, while there has been considerable progress in PFM reform, wide variation in the quality and effectiveness of PFM practice across the nine provincial Education and Health departments persists. Stability of the top administrative leadership, availability of PFM skills, varying degrees of accountability and departmental capability to establish PFM systems that conform to new accounting standards drive these variances in reform outcomes. Based on current shortcomings in PFMA enforcement, fiscal accountability and PFM capacity, the study concludes by making recommendations on how the PFMA and its regulations can be reviewed in order to strengthen the link between planning and budgeting, enhance supply chain management, promote effective capital infrastructure spending, combat fraud and corruption, improve the quality of monitoring and reporting and clarify PFM roles and responsibilities. It advocates a sustained long term PFM capacity building programme in the provincial sphere, supported by complementary public service reforms (such as recruitment, performance and consequence management).Thesis (PhD)--University of Pretoria, 2016.School of Public Management and Administration (SPMA)PhDUnrestricte

Tax collapse and the post-covid economy

The serious economic impact of the lockdown policy response to the Covid-19 pandemic has, understandably, generated substantial policy debate in the media and academia. Conspicuously absent from most of these discussions is an acknowledgement of an imminent tax collapse, which not only is unprecedented in modern South African fiscal history but also poses huge economic challenges for the country

Fiscal renaissance in a democratic South Africa

South Africa has overcome adverse initial conditions to achieve a remarkable fiscal transformation since the 1994 democratic elections, held amid uncertainty about its ability to maintain the rule of law and resist populist spending pressures. Constitutionally-based, durable and credible fiscal reforms have contained spending and rendered policy at all levels of government more transparent and accountable, and more predictable through multi-year budgeting. Extensive tax reform and more efficient tax collection has expanded revenue, permitting lower tax rates for both individuals and companies, and personal tax relief. Fiscal consolidation almost eliminated the budget deficit by 2005, and with improved debt management, has created a lower and more sustainable debt burden. While highly centralised revenue raising powers and greater decentralisation of expenditure to sub-national governments created a vertical fiscal imbalance, a strict no-bail out approach helped control provincial spending. The fiscal-monetary policy mix has stabilised the macro-economy and reduced uncertainty, reflected internationally in narrowed sovereign risk spreads and improved debt ratings. However, micro-service delivery in social expenditure has been disappointing (in some cases due to capacity constraints rather than inadequate fiscal allocations), and a long-term decline in infrastructure investment and capital stock is only belatedly receiving attention. The challenge is to increase social and infrastructure expenditure at a sustainable rate and to improve the quality of service delivery, to avoid undermining the gains in macroeconomic stability