/ 1 November 2023

Plans to reconfigure state will be announced in February

State Of The Nation Address 2022 At Cape Town City Hall In South Africa
Finance minister Enoch Godongwana. File photo by Jeffrey Abrahams/Gallo Images via Getty Images

A review of the size and structure of the state is underway to lift the burden that poor performance places on the budget, the treasury said on Wednesday in the medium-term budget policy statement (MTBPS).

It listed the planned reconfiguration of the state as one of the priorities over the next three years, along with increasing infrastructure investment and adopting a prudent fiscal stance that stabilises debt.

The treasury echoed a commitment by President Cyril Ramaphosa in his State of the Nation address in February to stem the waste of underperformance by closing or merging government departments. 

It noted it has conducted a number of spending reviews in recent years, and these have revealed poor policy choices, poor implementation and what it termed a “duplication of effort”.

“Too many government activities are inefficient, overlapping and non-critical,” it said. “Government considers these inefficiencies to place a further drag on the economy.”

Like the president, the treasury and Finance Minister Enoch Godongwana gave no indication as to which departments or government programmes may be closed. The steps to reconfigure the state will only be announced in the minister’s 2024 budget in February.

“The 2024 Budget Review will propose to scale down outdated and unproductive programmes and entities.”

But the MTBPS  set out four criteria that will be used to determine whether a department should be closed or merged.

The first is the performance record and size of the entity, “especially if it is no longer fulfilling its mandate” or lacks the capacity to do so.

The second is whether there is a bigger department that can absorb the functions of a smaller department.

The remaining two considerations are where there is a duplication between departments, and whether there is lack of clarity about a legislative mandate.

Godongwana said he believed the process should be sufficiently advanced by early next year for Ramaphosa to announce incisive changes.

It is widely expected that a reconfiguration could affect the department of public enterprises, and that this will probably see the president fine-tune the allocation of powers in relation to Eskom. At present, these are spread out between the public enterprises and mineral resources and energy departments as well as the fledgling ministry of electricity, headed by Kgosientsho Ramokgopa.

The treasury said recommendations on closures are being drafted by itself, the presidency and the department of public service and administration and the planning, monitoring and evaluation department.

It gave no estimate of the savings it hopes to effect through closures or consolidations.

In his MTBPS speech to the National Assembly, Godongwana said the review would also seek to create “standards for more sustainable remuneration of executives that serve public entities receiving transfers from the fiscus”. 

Asked at an earlier media briefing whether he believed trade unions would baulk at a review that could put public servants out of work, Godongwana said the perception that consolidation would result in jobs cuts was not necessarily correct.

As a hypothesis, he said it might be that the department of home affairs was severely understaffed while another department was bloated. Hence, reconfiguration would simply mean righting such an imbalance.

He did not expect a political outcry, the minister added, because unions had for some time opposed the proliferation of agencies within the state, of which there are some 200.

“We are likely to have built a consensus.”