Balancing figures requires close eye on population numbers
Since the 2011 national census, the Eastern Cape has lost R23.9bn due to changes in population numbers that determine budget allocations, finance MEC Mlungisi Mvoko says.
This includes R4.5bn the province has lost in its total allocation by national government on the equitable share and conditional grants allocations in the 2020 MTEF.
The MTEF is the mediumterm expenditure framework which runs over three-year cycles.
Mvoko suggested balancing the Eastern Cape’s budget required as firm a focus on population numbers as on financial figures.
National government disburses equitable funds for social services to provinces based on the size of the provincial population.
The Eastern Cape’s provincial equitable share (PES) had been declining for many years and, with this situation unlikely to change any time soon, the province should learn to do more with limited resources, Mvoko said.
But the province could easily staunch some of the money that flows out.
For example, it also lost R420m in its conditional grant allocation which, Mvoko emphasised, was due to underperformance in the allocations.
“I want to urge all departments to ensure that conditional grant allocations are fully spent, in line with conditions attached to them, to avoid future reductions from national government.”
Mvoko noted during his budget speech that the exit from this province of people relocating to other provinces had a huge impact on the province’s finances.
“We also lost R2.4bn over the 2020 MTEF due to updates of new data in the PES formula.
“The updates in the PES formula continue to reflect an outward migration of population numbers from the Eastern Cape to other provinces.”
Mvoko said it was important for the province to be properly counted during the 2021 census.
“I wish to urge all residents of this province to make sure they are counted in the 2021 census.”
The province was working with National Treasury to reEastern view the PES formula and to consider changes in the cost of delivering services among provinces.
The Eastern Cape saw a reduction of R681m in the PES as a result of a drop in CPI projections.