ANNUAL REPORT 2020/21 - Westerncape.gov.za

4.REPORT OF THE ACCOUNTING OFFICEROverview of the operations of the DepartmentThe Western Cape economy has been hard-hit by the COVID-19 pandemic, exacerbating the economicand socio-economic challenges experienced within the Province. Before the pandemic, the SouthAfrican economy was already beset by structural issues such as a skills mismatch, low productivity,lack of competitiveness, infrastructure backlogs, red tape, and energy insecurity. These issues if notaddressed will continue to hinder the economy’s rapid recovery.Firms continue to face significant challenges resulting in substantial job losses. DEDAT expects theProvincial economy to rebound in 2021, with economic growth of 4.4%. From a sectoral perspective,the hardest hit sectors in the Western Cape are tourism, the informal sector, construction, trade, andmanufacturing. The shock of the current global pandemic created a continued need for governmentspending to reduce the risk of permanent damage to the economy., This has, in turn, caused contractionsin GDP unparalleled in modern history for most economies. Our Western Cape Recovery Plan providesthat we can only recover and prosper if our economy grows and residents generate income.Achievements for the yearThe year under review has once again provided the Department with the opportunity to establish itselfas a leader in the creation of a conducive and growing economic environment. The activities of theDepartment continued to span a wide range of economic interventions and the aim of supporting ademand-led, private sector-driven approach to economic development was again successfully realised.A total of R4.7 billion worth of investment into the Western Cape was achieved in the 2020/21 financialyear against a target of R1.9 billion-R2.7 billion. This resulted in the creation of 1 830 jobs and growingthe Western Cape’s industrial base.The improvement intervention for the Port of Cape Town also continued. Encouraging progress hasbeen made despite the negative impact of COVID-19. A data integration project was completed, anda root cause analysis of transporter congestion was done.Our SMME Booster Fund, through collaboration and in partnership with SMME support organisations –NPOs, corporates, municipalities, government departments and/or their agencies, tertiary institutions,business associations and other relevant support organisations – provided support and assistance toSMMEs to maintain and/or enhance sustainability to enable them grow and create jobs. The SMMEBooster Fund supported 17 organisations who collectively supported 397 SMMEs. To date, 90 jobswere created through four of the 17 organisations that completed their SMME Booster Fund projects.It is envisaged that over 300 jobs will be created through the remaining 13 organisations.In the area of resource resilience: four declarations of green economy investment in the WesternCape that have been supported by the Western Cape Government (through GreenCape and Wesgro)have been signed and completed in 2020/21 financial year. These will lead to a total investment ofapproximately R11.6 billion.Towards the end of 2020, a three-year Municipal Energy Resilience Initiative, or MER Initiative, waslaunched to enable municipalities, businesses and households to generate, procure and sell their ownpower. The project aims to assist municipalities to take advantage of the new energy regulations,DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM – Annual Performance Plan for 2021/22 13

GENERAL INFORMATIONwhich include the potential for municipalities to purchase energy directly from independent powerproducers, or IPPs. Phase 1 was identified and is working with the six candidate municipalities in whichpioneering energy projects will be implemented.The Skills Development and Innovation Programme focused on delivering skills programmes aimedat addressing the gaps, and improving the skills of our youth and workforce by developing key skillsto match the growing demand for appropriate skills in our economy – therefore enhancing regionalcompetitiveness. To support a demand-driven approach that aims to improve youth-employabilitysector skills needs, as well as address the impact of the pandemic, the Skills Development andInnovation Programme within DEDAT implemented three (3) key youth employment programmes. TheICT Technical Skills Programme; our flagship Work and Skills Programme and Artisan DevelopmentWork Placement Programme are responsive to industry needs. The initiative has over-achieved onthe number of beneficiaries supported, as well as funds leveraged towards these programmes for thecurrent as well as future financial year.The programme – in partnership with the College of Cape Town, the National Skills Fund, the City ofCape Town and the BPO industry – also launched the first public private partnership BPO Academy ofExcellence. The academy will develop bespoke industry certifications in response to changing industryneeds. The academy will also, through skills development programmes, develop and bring employmentto thousands of beneficiaries from some of our most marginalised communities, in support of theBPO industry.Challenges for the yearTo respond to the immediate challenges which the pandemic imposed on businesses, the Departmentwas capable of pivoting its operations in favour of a number of COVID-19 specific support interventions.The result is that these daunting challenges resulted in some of our most notable successes at a timewhen businesses in the Western Cape needed it most.In assisting businesses to navigate through the COVID-19 pandemic, the Enterprise DevelopmentUnit implemented various measures to enable businesses to remain viable and sustainable during thepandemic, ensuring their survival and developing their capacity. This included: The COVID-19 Business Relief Fund (the fund) contributed to alleviate the economic impact onsmall and micro enterprises (formal and informal) operating in the Western Cape caused by COVID-19.The fund provided grant funding (about R39 million) and supported 249 businesses (formal/informal) throughout the Western Cape and sustained just over 2 000 jobs. The Community Economic Recovery Project supported 122 spaza shops across the geographicareas City of Cape Town, Cape Winelands, Overberg and Garden Route. Electronic vouchers wereissued to community kitchens which were redeemed at the spaza shops or food suppliers, wherethe payment system is linked to a technology platform. Approximately 22 500 beneficiaries weresupported via the community kitchens.The Department also distributed 11 000 business safety kits throughout the province and can reportthat 2 656 women, 854 youth-owned and 60 disabled-owned small businesses were assisted incontinuing to operate safely.14

The Department contracted support to assist businesses in undertaking COVID-19 risk assessments,developing risk mitigation plans, ensuring adherence to the Department of Employment and Labourworkplace safety regulations and relevant sector specific COVID-19 workplace safety requirements, aswell as to implement any other required interventions to enable them to manage potential furtherCOVID-19 waves and potential future pandemics. The support was provided to 459 businesses, with afurther 51 businesses supported to resolve complex COVID-19 workplace safety non-compliance matters.In support of ease of doing business during this time, the Red Tape Reduction Unit repurposed itsexisting case management system to deal with the requests from businesses for assistance throughoutthe very first lockdown. This included facilitation of requests for permits to operate, lobbying for sectorsto open and the interpretation of the regulations issued in terms of the Disaster Management Act. InMay 2020, the RTRU embarked on a project to engage directly with the UIF to facilitate payment ofUIF TERS applications made by employees and businesses. Overall, the RTRU has since May 2020assisted 8 576 employees and 180 companies, yielding an average pay-out total of R43 866 240 overall.Additionally, the Department – like many organisations – faced several constraints which challengedthe implementation of its plans. A need for fiscal austerity and required reprioritisation of resources toaddress the resulting consequences of the pandemic, posed some of the most immediate challenges.The Department’s cognisance of this is visible in each step of the development of current planningand it will endeavour to continue executing plans in line with its defined and established objective forgrowth of the Western Cape economy. Strategic choices regarding interventions will form core focusin ensuring the Department achieves delivery as set out. Financial and human resources required forimplementation will also be reviewed, prioritised and aligned to key areas to ensure delivery is bothsound and aligned to strategic objectives.Overview of the financial results of the DepartmentDepartmental receipts2020/2021Departmental r)/UnderCollectionR’000R’000R’000Non-tax receipts3512 176Sale of goods and services other thancapital er)/UnderCollectionR’000R’000R’000(1 825)3331 555(1 222)174333410(77)Tax receiptsCasino taxesHorse racing taxesLiquor licencesMotor vehicle licencesTransfers receivedFines, penalties and forfeitsInterest, dividends and rent on landSale of capital assetsFinancial transactions in assets andliabilitiesTotal35133(33)32(32)1 938(1 938)1 113(1 113)2 176(1 825)1 555(1 222)333DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM – Annual Performance Plan for 2021/22 15

GENERAL INFORMATIONThe primary driver of revenue within the Department is tourist guide registration fees. At the end ofthe financial year, the Department over-collected on its projected revenue by R1.825 million.Of this over-collection, funds received from the merSETA for the implementation of various skillsprojects amounted R1.6 million was received during the financial year. Further funds were also receivedfor the sale of obsolete assets to staff.Programme expenditure2020/2021Programme ’000R’000R’000Administration62 74462 6786659 47756 9142 563Integrated Economic DevelopmentServices89 37789 3552267 04066 271769Trade and Sector Development69 95169 34260963 71861 5302 1887 2997 248519 2239 058165146 768143 5603 208185 496181 8073 689Business Regulation andGovernanceEconomic PlanningTourism, Arts & EntertainmentSkills Development and InnovationTotal76 71376 57813560 03558 1481 88782 03481 9508466 27465 0551 219534 886530 7114 175511 263498 78312 480The Department has a final appropriation of R534.886 million for the 2020/21 financial year. Of this, theDepartment expended 99.2% of its appropriated funds compared to 97.56% in the 2019/20 financialyear. It should be noted that only Programme 5: Economic Planning expended less than the 2% normfor the financial year. This was primarily due to lower than anticipated expenditure for the COVID-19:Occupational Health and Safety Project aimed at businesses in the Western Cape.Virements/roll-oversBy the end of the 2020/2021 financial year, virements were undertaken to defray over expenditureacross main divisions within the vote. These virements were applied as follows: Programme 1: Administration. A virement to the programme was done to defray over expenditurewithin the goods and services and capital assets economic classification. The virement waseffected from Programme 3: Trade and Sector Development. Programme 5: Economic Planning. A virement to the programme was done to defray overexpenditure within the compensation of an employee’s economic classification. The virement waseffected from Programme 2: Integrated Economic Development Services. Programme 7: Skills Development and Innovation. A virement to the programme was done toprovide funding for additional learners to be placed within host companies as part of the workplacement supply project within the Department. The virements were effected from Programme 2:Integrated Economic Development Services as well as Programme 3: Trade and SectorDevelopment and Programme 6: Tourism, Arts and Entertainment.Unauthorised, fruitless and wasteful expenditureThe Department did not incur any unauthorised expenditure however there was one instance offruitless and wasteful expenditure related to expenditure incurred for accommodation. It was found16

that the official did not exercise reasonable care and hence the expenditure incurred was made in vain.The funds were recovered from the official and consequence management was undertaken.The strategic focus over the short to medium term periodThe economic impact of COVID-19 has been severe and widespread, with the global impact resultingin lowered investment and business confidence, loss of jobs, limited trade, and business vulnerabilitiesrelated to SA’s dependence on international markets.The WC recovery plan is aligned to the Department of Economic Development and Tourism’s fiveyear strategy and addresses the current need to create and sustain jobs, as well as the many systemicchallenges that were captured in the Department’s five-year strategy. Within the context of this linkage,several priorities have been identified as key to addressing the challenges within the economy. Thepriorities are depicted in the graph below.In addition to this, the COVID-19 pandemic has had a major impact on businesses and citizens. Asa result, within the fiscus constraints, the Department has developed a focused strategy which hasprioritised key thrusts to help the economy recover, underpinned by the core foundational work ofthe Department. These prioritised thrusts are ease of doing business, energy, boosting investmentand exports, along with communications and policy development. These focused priorities requireadditional capacity and specific skill sets to help plan and implement.Prioritisation of economic recovery in the face of fiscal constraintsLong term goalPrimary prioritiesEnabling prioritiesThe foundationSkillsdevelopmentJobsEase of doingbusinessEnergy resilience(inc of ASEZ)Investment andexport growthData modelling ytic economicinfrastructureSectordevelopmentDigital &innovationEconomic advocacy& stakeholder co-ordConsumerprotectionGreen ecomomyMunicipalities &spatialDEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM – Annual Performance Plan for 2021/22 17

GENERAL INFORMATIONPublic private partnershipsThere are no PPP undertaken by the Department of Economic Development and Tourism.Discontinued activities/activities to be discontinuedNo activities were discontinued during the 2020/21 financial year.New or proposed activitiesN/ASupply chain managementSCM processes and systems to prevent irregular expenditureThe Department did not conclude any unsolicited bid proposals for the year under review.A large percentage of the Department’s work is undertaken through the supply chain processes andas such this is critical to the business of the Department. In the financial year under review, the SCMprocesses were critically reviewed to combat waste and corruption as well as to improve efficiencies.Standard operating procedures and processes are in place to mitigate against the occurrence ofirregular, fruitless and wasteful, and unauthorised expenditure, through the design and implementationof detective, preventative and corrective controls. The internal control unit performs oversight andmaintains adherence to governance and compliance prescripts. These controls are incorporated in thecurrent finance policy manual and delegation framework.Since much of the SCM system is manual, structured capacity building and training programmes arein place to promote department-wide awareness of SCM systems, standard operating procedures,policies, templates and tools.In the 2020/21 financial year the Department procured goods and services according to the procurementplan with a 6.04% deviation which was due to projects having been cancelled and/or redirected astransfer payments.The Department continuously maintains and manages moveable assets on the LOGIS system inaccordance with the minimum required information to be in the fixed assets register. The year-endphysical verification count of all moveable assets commenced on 8 February 2021 and was completedon 26 February 2021. All the moveable assets acquired in the year under review have been accountedfor and accurately captured on the Asset Register as per the Asset Management Framework and thePublic Finance Management Act.As part of the effort to improve efficiencies, the Provincial Treasury introduced an automatedprocurement planning toolkit on which the Department’s procurement requirements are captured andreported on. The Department has also reviewed its templates and checklists to ensure processes areconsistently applied and act as a deterrent against non-compliance.Conflict of interest is managed through procurement and other processes. DEDAT continuouslyensures that: Senior management, supply chain management practitioners, role players and bid committeemembers disclose their financial interests. The service providers are required to disclose theirfinancial interests and connected government employees through the supply chainmanagement processes. Vetting of senior management, staff and key suppliers.18

Verification of bidders’ conduct against the register of tender defaulters and database ofrestricted suppliers.In addition, all staff appointed within the Supply Chain Management Unit, complete a declaration ofinterest and acknowledgement of the content of the code of conduct form of which a record is kept.Gifts and donations received in kind from non-related partiesNameDesignationNatureEstimatedValue (R)RelationshipwithReceiverHerman

3.12 labour relations 3.13 skills development 3.14 injury on duty 191 3.15 utilisation of consultants part e: financial information report on the audit of the financial statements appropriation statement notes to the appropriation statement statement of financial performance statement of financial position statement of changes in net assets