KwaZulu-Natal is facing severe financial constraints that may hamper the efforts of the Government of Provincial Unity (GPU) to fulfil its promises to the public.
The state of the province's finances was detailed during a media briefing on Tuesday where Premier Thami Ntuli provided an update on what his government has achieved in its first 100 days in office.
The revelations come as the Provincial Treasury disclosed that billions have been cut from the province's budget by the National Treasury over the past few years, with an additional R12 billion set to be cut in the next three financial years.
Recently, the KZN Department of Education highlighted the impact of the budget cuts, stating that it is unable to hire new teachers and can only replace those who have retired or passed away.
Ntuli noted that while significant achievements have been made by the GPU in the first 100 days, financial constraints were likely to impede progress.
“The KwaZulu-Natal Provincial Government is facing challenges regarding public finance management. The province’s cash flow projections must be managed closely to eliminate wastage.
“At the outset, the 2023/24 wage increase, implemented in the April 2024 payroll, means that prioritised cash flow must fund this wage increase in the current financial year,” he said.
He added that the 6th administration wants to avoid entering an overdraft position at the end of the 2023/24 financial year. However, he revealed that service providers are owed R10 billion.
The province entered the 2024/2025 financial year with R5.5bn in accruals due in the current cash flow, which is putting pressure on the fiscus.
“As the Government of Provincial Unity, we inherited expenses from the 2023/24 financial year that should be paid using the 2024/25 financial year budget,” he said.
Ntuli highlighted that KZN has experienced a declining contribution of 1.5% to the economic sector, negatively impacting future growth and the ability to attract private investment.
“The province ended the 2023/2024 financial year with a net overspend of R839 million and is projected to overspend by R9.7 billion.
“The 2024/25 financial year shows that departments budgeted a 4.5% increase in their baseline; however, the settled wage agreement is for 4.7%, resulting in a two-percentage point difference. This expenditure is a runaway target,” he stated.
“The KZN Provincial Government has limited financial resources, meaning we will not be able to fulfil all promises within the anticipated time frame. However, we will ensure improved integration in planning and implementation to use resources smartly,” the premier said.
He also mentioned that the provincial government is committed to implementing revenue enhancement strategies, encouraging all departments to find ways to improve their own revenue generation and collections to increase funds for priority services.
“In our situation analysis, we have noticed that expenditure is growing while revenue is declining, which is not sound public finance. At the Executive level, we agree that the Provincial Treasury, together with Heads of Department, must account for and find opportunities to enhance collection efficiency, reviewing rates in their respective portfolios to close this unhealthy gap,” he noted. To manage finances effectively, the government has initiated cost-cutting measures to limit non-essential spending, such as reducing travel expenditure by 30% and extending the asset replacement life cycle for vehicles and computers.
MEC for Finance Francois Rodgers stated that the province will face a challenging financial environment over the next two years. Since taking office, Rodgers has been cutting wasteful expenditure, including the spending of millions on renting cars for MECs.
“Over the past four financial years, the National Treasury has cut our equitable share by R66 billion. Over the next three years, a further R12 billion is expected to be cut due to various factors, including economic performance.”
The Mercury