Page 25 - Parliament Budget Office Annual Report 2022-2023

Treasury (NT) has requested public comments on following the Constitutional Courts ruling on the Minister of Finance vs Afribusiness NCP CCT279/20.
In response to the majority judgement of the Constitutional Court, the NT has drafted Preferential Procurement Regulations (draft PPR 2022) and requested public comments on the draft. The PBO is concerned that there is a lack of evidence that, NT had, discussed or agreed with other government departments before the drafted PPR 2022 being publicly released for comment.
The PBO is further concerned that the NT’s draft PPR 2022 is based mainly on their interpretation of the judgement handed down by the Constitutional Court on 16 February 2022. In that the NT’ main concern seems to be to ensure that the regulations suggested by the Minister of Finance cannot be challenged on the basis that the Minister is “overreaching” his power in cases where organs of state have the right to develop policies with regard to preferential procurement.
The response of the NT to the ruling has been to propose new regulations that omit previous regulation that they interpret could be challenged as Ministerial overreach that impacts on the right powers of organs of state to formulate preferential procurement policy. The PBO provided that Parliament to matters to consider when considering the proposed Public Procurement Bill of 2023;
u The Constitution of South Africa requires national legislation to prescribe a framework for organs of states to implement preferential procurement
u Fragmented Preferential Procurement Framework (Public Procurement) will delay realisation of Nationally coordinated policies like, BBBEE, Industrial Policy and other development policies
u Due to lack of capacity and capabilities organs of state always relied on the preferential procurement system prescribed by the Minister of Finance
u Requesting each organ of state to have own approach to preferential procurement is divergence from international norms
u The omission of Local procurement and content in the 2022 draft PPPFA have far reaching implication for industrial policy (Industrialisation) in South Africa
u Foreign and domestic investors have invested and created jobs in South Africa because of government’s preferential procurement regulations
u Omitting local content may lead to organs of state procuring imported goods instead of domestically produced goods
1.8 Brief on Business Bounce-back Support and the Credit Loan Guarantee Schemes for Small, Micro and Medium Enterprises (SMMEs)
The brief provided an update on the impact of government’s support interventions to businesses following the COVID-19 pandemic. One of the main objectives of the ERRP was to re-industrialise the economy, focusing on growing small businesses. More than 2.6 million SMMEs were counted during the first quarter of 2020. 66.9 % were classified as informal, and 28.9 % were classified as formal. 74.8 % of the formal SMMEs were black-owned. Small businesses contributed R2.3 trillion (22 %) of the R10.5 trillion total turnover for industries in the South African formal business sector. The interventions introduced in the ERPP were linked to the vision of the country set out in the National Development Plan.
Our analysis has shown that the COVID-19 Loan Guarantee Scheme worth R200 billion had been a failure. First, there was a minimal take-up by small, medium and micro enterprises (SMMEs) that amounted to a mere R13.5 billion. There had been an intervention by the National Treasury in July 2020, with minimal changes, and a similar lack of acceptance. A “Bounce- Back” support scheme has since been launched in April 2022 to help small businesses recover from COVID-19, the violent unrest in July last year, and the KZN floods.
1.9 Policy Briefs; 2019-2024 Medium term strategic framework (MTSF)
2019-2024 MTSF, Priority 5: Spatial Integration, Human Settlements and Local Government:
The PBO analysis notes that to make an impact on economic growth and spatial transformation, the spatial integration programme aims to institutionalise a coordinated, integrated and cohesive National Spatial Development Framework (NSDF). It is therefore vital that the Department of Planning Monitoring and Evaluation (DPME) ensures that all government departments are capable of reporting on projects spatially, although guidelines were not issued by March 2022 as otherwise planned.
It should instead be noted that the Department of Cooperative Governance has made progress towards the redesign and refurbishment of large urban centres as ‘smart cities’ with the corresponding development of One Plans. The implementation of these plans should be monitored to ensure that they make an impact on spatial integration.
The Department of Public Works and Infrastructure (DPWI) plays
PARLIAMENTARY BUDEGT OFFICE ANNUAL REPORT FOR THE 2022/2023 FINANCIAL YEAR
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