Covid-19: R500bn and the case for procurement reform

Health care workers, holding signs outside a hospital in Cape Town, protest the lack of personal protective equipment in the fight against the Covid-19 outbreak. Picture: Mike Hutchings/Reuters
Health care workers, holding signs outside a hospital in Cape Town, protest the lack of personal protective equipment in the fight against the Covid-19 outbreak. Picture: Mike Hutchings/Reuters

NEWS


President Cyril Ramaphosa has vowed to act strongly against any corruption and profiteering from the Covid-19 coronavirus crisis, but the systems in place to guard against this may be falling short. Spotlight looked at preliminary spending figures and asked some experts how public money can be safeguarded during this time.

Next week Finance Minister Tito Mboweni will table the special adjustment budget. This budget will change the allocations made in the existing budget tabled in February this year to help fund government’s ongoing Covid-19 coronavirus response plan.

Through re-allocations in this special adjustment budget, Mboweni will have to find R130 billion of the R500 billion Covid-19 relief package announced earlier by President Cyril Ramaphosa.

Read: What you need to know about SA’s R500bn Covid-19 support package

These adjustments in the new budget will, among others, see R20 billion allocated to provinces to help fund healthcare and other front line services for the Covid-19 response.

With such large sums of money being shift around and spent in a time of crisis, calls are increasing for more to be done to safeguard public money against potential looters.

The multi-billion rands support package, a portion of which will come through budget adjustments that will be announced next week, is aimed at helping mitigate the impact of the pandemic, especially in poorer communities.

Emergency procurement sits at the heart of government’s reaction to the pandemic, and is particularly prone to exploitation. The same goes for economic support and stimulus packages.
Auditor-General Kimi Makwetu

It is in these communities where the need for support and services is real, said Aminah Abrahams, a community leader in Manenberg, Cape Town. He was speaking this week during a webinar titled Our Voices Matter, hosted by the Socio-Economic Rights Programme of the Dullah Omar Institute.

Abrahams said she helped 600 struggling community members apply for a food parcel, but only about 50 households received one. The same happened for community members who applied for a Covid-19 relief grant. “Only a few got approval. Many were declined and only got an SMS with no alternatives offered.

“People are desperate for this money. It is mainly people who used to sell their fruits at the traffic lights. These are people living from hand to mouth and when they are not helped, they ask me if this is a legit thing,” Abrahams said.

It is questions such as these, and given the huge sums of money set aside for the health, social development and economic of the Covid-19 response, that have some civil society organisations such as the Public Service Accountability Monitor (PSAM), insisting on greater transparency and more safeguards.

This has been echoed by opposition parties and legal experts. Government has raised similar concerns that existing safeguards may not be enough and that more needs to be done to ensure the money reaches the intended beneficiaries and that those dependent on the public health sector, get the care they need.

Read: Calls to protect R500bn Covid-19 package from looters

Apart from some provincial disaster management grant funding, provinces had to re-prioritise funds in their existing budgets to fund their Covid-19 responses.

Three months into the national lockdown, some provinces have already spent more than R1 billion on Covid-19 efforts. Details on this spending has been scant until now, with some provinces indicating there will be a proper breakdown of re-allocations and spending in the provincial adjustment budgets set to follow Mboweni’s announcement next week.

Health spending on Covid-19 in Gauteng

In Gauteng, health spokesperson Kwara Kekana told Spotlight that by June 3 the provincial health department had spent R448 million on its Covid-19 response.

Kekana said this was done through a “re-prioritisation process of funds [from district health services, hospital services and goods & services], the provincial disaster relief grant, and a “cash facility made available to enable the department to make commitments subject to the confirmation of the budget by provincial treasury”.

She could not give a full breakdown of all items procured and from whom as the department was still compiling and quantifying the amounts. “There are oversight structures in place to oversee the procurement of Covid-19 related supplies,” Kekana said. “There is a committee headed by the deputy director-general of supply chain from Gauteng Provincial Treasury responsible for oversight of the procurement function and there is a procurement committee in the department chaired by the chief financial officer (CFO) that is responsible for making recommendations to the head of the department,” Kekana said.

Last month, however, the CFO in the health department, Kabelo Lehloenya, resigned abruptly, leaving many questions for this sudden departure. Lehloenya was chairperson of the department’s Covid-19 procurement committee tasked with expediting procurement of goods required for the Covid-19 response.

DA member of the provincial legislature Jack Bloom questioned the financial officer’s sudden resignation. “Did she resign out of conscience, or was she implicated in something?” said Bloom, pointing to rumours on Twitter of alleged tender irregularities over personal protective equipment procurement implicating premier David Makhura. “We need a proper explanation. We need to guard against corrupt interests taking advantage of the health crisis to enrich themselves in a department that has suffered grievously from massive corruption,” Bloom said.

However, Makhura and Health MEC Dr Bandile Masuku, dismissed the rumours and allegations posted on Twitter labelling them a “Bell Pottinger-type smear campaign” by those aggrieved at the authorities’ clampdown on corruption.

Health spending on Covid-19 in the Western Cape

Meanwhile, in the Western Cape Dr Keith Cloete, head of health, said during an earlier media briefing that the preliminary figures for the province’s Covid-19 response was tagged at R2.5 billion.

Director-general for the provincial government, Harry Malila, said based on the 2020/21 budget framework the Western Cape had to re-prioritise funds for its Covid-19 response. “We’ve started to look at those things that we are not doing and where we do not have to incur expenditure at the moment.

“For example, we are not travelling at the moment, we are not having major conferences. So some expenditure is not happening in the departments at the moment during the lockdown.”

Malila said a lot of expenditure was from current resources and that it “will be aligned and adjusted” when the province tables its adjustment budget. He was at pains to stress that shifting funds does not mean nothing is happening with non-Covid-19 related programmes.

Explaining the financial implications of Covid-19 for the province, Malila said all spending on the pandemic efforts so far came from the its own resources. He said early projections showed that just on medical expenditures “we are talking about R1.5 billion”.

“And it’s not just for health – there is also the issue of personal protective equipment (PPE). In health it’s anything between R800 million and R1 billion. Then we still need to add PPE for schools, so those amounts will grow.”

He said for the quarantine and isolation facilities, the provincial Cabinet set aside about R300 million. Now, the province is waiting on its allocation (of R20 billion) from national government for its Covid-19 response – money that is desperately needed.

Health spending on Covid-19 in KwaZulu-Natal

In KwaZulu-Natal Finance MEC Ravi Pillay told Spotlight they “are acutely aware of the risks that are already manifesting themselves” in Covid-19 spending. “We are accordingly monitoring Covid-19 expenditure closely,” he said.

Pillay explained the oversight mechanisms in place, especially for the health department, due to the higher projected spending. “Weekly expenditure reports are analysed by the provincial Treasury. These reports are analysed and price variances across similar items are further interrogated. The Auditor-General is working closely with the treasury to ensure that there is audit coverage over most procurement,” he said.

Pillay said the provincial Treasury had introduced a programme of “pre-audits for large contracts” and internal audits and internal controls are being strengthened. He stressed, however, that while the provincial Treasury had an oversight responsibility, “we cannot take over the procurement responsibility of departments. As stated in the 2020/21 budget speech, departments remain responsible and accounting officers remain accountable”.

Unintentionally expose government

Auditor-General Kimi Makwetu, in an opinion piece, noted: “Emergency procurement sits at the heart of government’s reaction to the pandemic, and is particularly prone to exploitation. The same goes for economic support and stimulus packages.”

Makwetu warned that easing controls and streamlining processes to respond to the Covid-19 crisis may “unintentionally expose government to the risk of rampant misuse and abuse of public resources”.

Spokesperson, Africa Boso, told Spotlight there are “interactions with Parliament and government underway” following the Auditor-General’s offer to avail expertise to help deal with the challenges posed by the pandemic from “an appropriate financial management perspective”.

Also recognising the need for emergency procurement in responding to the pandemic, some civil society organisations, however, argue more should be done to safeguard public coffers in this time.

People are desperate for this money. It is mainly people who used to sell their fruits at the traffic lights. These are people living from hand to mouth and when they are not helped, they ask me if this is a legit thing.
Aminah Abrahams, a community leader in Manenberg

Falling short – oversight and transparency

To hold those in charge of state coffers accountable, however, depends on the availability and quality of information the public has access to. This is why many civil society organisations are calling for more transparency and procurement reforms.

“There’s a need to institute reforms to the national procurement system that entrench transparency, citizen participation and monitoring throughout the contracting cycle,” said Kirsten Pearson of the Budget Justice Coalition.

The coalition is among organisations that have called on the National Treasury and Parliament to ensure that procurement and contracting data are timeously made public.

Real-time monitoring

Pearson said that real-time access to spending information can make a difference. “For a very long time, only a small percentage of public procurement and contracting information has been published in the public domain. Despite what the Constitution says, [government] departments simply don’t publish all the procurement information.

“This means that a lot of financial mismanagement is concealed until it comes to the audit process,” she said.

Pearson said provincial Treasuries should explain how they are ensuring that procurement was being managed effectively and why provincial health departments were not already regularly publishing the full range of procurement and contracting information.

“Real time monitoring has been sorely lacking,” Pearson said.

This article was produced by Spotlight – health journalism in the public interest.


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