Chairperson, hon members, our government has set itself a clear vision for the next five years. Its vision is embodied in the Medium-Term Strategic Framework, derived from the ruling party's manifesto, and finds expression in the 12 outcomes which government intends achieving over the medium term.
The Medium-Term Strategic Framework and these outcomes are the guiding principles that inform the work of the National Treasury. They are in line with its strategic focus areas of promoting economic growth and work opportunities, reducing poverty, promoting the optimal allocation and utilisation of resources, ensuring good governance and accountability, and maintaining macroeconomic stability. That is why, Chairperson, we present our Budget Vote for consideration by this House today, and we ask the House to approve our allocation so that we are able to deliver on these imperatives.
The National Treasury's resolve to improve financial management and ensure that funds are spent effectively remains unwavering. The Office of the Accountant-General and the Specialist Functions are to accelerate current efforts targeted at rooting out wastage and corruption and promoting cost efficiency, as opposed to the narrow politically-motivated campaign of the DA with its monitor. Ours will be judged by what comes out of the Auditor- General's report, and this House will engage on such findings.
Procurement reforms are currently underway to address the current supply chain management challenges and at the same time align procurement to government's broader economic objectives. Some of the interventions being explored include analysis of the market, benchmarking of prices, determining the most appropriate method of procurement, and due diligence audits on information provided by bidders prior to the awarding of contracts. This may also result in the centralisation of bids for strategic commodities. Oversight in respect of procurement planning and the auditing of the processes of adjudication and selection of suppliers before the awarding of large contracts is also to be strengthened.
Turning to the Integrated Financial Management Systems, the National Treasury will maintain government's current financial management system at a level of 98% availability to users by implementing the third phase of the Integrated Financial Management System, which will focus on rolling out the completed procurement, human resource and asset management modules in 2010- 11 and fast-tracking the development and implementation of the remaining modules in the 2011-12 financial year.
The period ahead will also see a further strengthening of the country's intergovernmental fiscal system. In line with some of the proposals made in the relevant parliamentary committees when the Division of Revenue Bill was processed, the National Treasury is reviewing the fiscal system for provincial and local government. Specifically, the provincial equitable share formula is being reviewed to improve targeting and to ensure alignment between the delivery agreements signed between the President and Ministers responsible for concurrent functions like education and health.
Chair, members will appreciate the vast fiscal differences that exist between the country's municipalities. Therefore the review of the local government fiscal system will attempt to align this fiscal system to these differences without compromising local accountability. In addition, a process is currently underway to review all conditional grants with the aim of rationalising them to ensure that the sphere of government that is closer to the people is funded directly to accelerate the delivery of quality basic services. The reforms will be phased in from the next financial year.
Steps to improve the quality of local government budgets are at an advanced stage. The quality of municipal budget information has improved considerably following the implementation of the new Municipal Budget and Reporting Regulations, which prescribe norms and standards for the preparation and format of municipal budgets.
As from the 2010-11 municipal financial year, all 283 municipalities are required to prepare their budgets, adjustment budgets and in-year financial reports in a uniform, prescribed format. This will greatly facilitate transparency and understanding of municipal budgets by councils, communities and other stakeholders, and thus, enhance oversight.
The Siyenza Manje programme, currently administered by the Development Bank of Southern Africa, DBSA, seeks to build capacity in the municipalities. In the past financial year, the programme succeeded in unlocking capital spending of R8,2 billion. Government is currently reviewing the programme to improve its targeting and to ensure its impact is sustainable.
Part of the review would look at options to strengthen local government governance, infrastructure delivery and financial management. It is expected that these interventions, together with the review of the local government fiscal framework, will put government in a better position to attain a responsive, accountable, effective and efficient local government system. This intervention speaks directly to outcome number 9; and also to sustainable human settlements, which is outcome number 8; and to vibrant, equitable and sustainable rural communities, which is outcome number 7.
As government, we are also continuously confronted with the question of how best we can position our Development Finance Institutions, DFIs, in order to enhance their capacity to effectively and efficiently deliver significant and tangible developmental results to all the qualifying needy individuals and institutions of South Africa. This means that contributions of the DFIs must be measured, not by meaningless statistical numbers, but by their direct impact on the lives of the ordinary people of South Africa, observable through sustained improvements in incomes and standards of living as a result of access to DFI funding, the projects that they deliver, facilities and the infrastructure base.
In spite of government's concerted efforts, there are still some very significant challenges facing our DFIs. These include the sheer quantum and volume of underdevelopment, especially in provinces such as the Eastern Cape and Limpopo, as well as several places even within the metro areas. Our DFIs have limited capacity in terms of a financial resource base to satisfy these needs. The impact of these constraints is further aggravated by lack of institutional capacity in most implementing institutions such as municipalities, beneficiary contractors, emerging farmers and small, medium and micro enterprises, SMMEs.
The total combined balance sheet of all our national DFIs put together was approximately R142 billion in 2009. A strategic partnership with banks and capital markets is going to be key to leveraging development finance to ensure greater impact in the future.
Approximately 98%, which is R139 billion, of the total assets of South Africa's DFIs is concentrated in just five major DFIs, that is the Development Bank of Southern Africa, DBSA, the Industrial Development Corporation, IDC, the Land Bank, the National Empowerment Fund, NEF, and the National Housing Finance Corporation, NHFC. The IDC constitutes 52% of the total DFI asset base, whilst the DBSA constitutes 28%. The National Treasury has two of these DFIs reporting to it - the DBSA and the Land Bank.
A cursory look at the DBSA, Chairperson and members, reveals that, currently, the DBSA's geographical spread of its developmental loans exhibits a bias towards resourceful metros - Gauteng, KwaZulu-Natal and the Western Cape. This is followed by a significant presence in the Southern African Development Community, SADC, and multinational investments.
Owing to this bias, government challenged the DBSA to deepen its development impact and, in particular, to increase its support to poorer municipalities in the following manner: Firstly, to assist weaker municipalities with project identification, preparation and implementation to enhance service delivery, growth and improved revenues.
Secondly, to assist the capacity of municipalities through improved access to appropriate funding, including securing the participation of appropriate private sector partners for enhanced project quality and risk mitigation in project delivery.
Thirdly, to assist the administrative systems, management quality and operational processes of municipalities through the Siyenza Manje programme in order to ensure their diversified revenue streams.
Lastly, to assist with the eradication of classroom backlogs in some provinces.
To achieve this, the current Budget includes measures intended to enhance the DBSA's capital nature by increasing its callable capital by R15,2 billion from R4,8 billion, resulting in a total of R20 billion. This will effectively increase the DBSA's lending capacity from R38 billion currently to R140 billion. Since the increase of the DBSA's callable capital requires the amendment of the DBSA Act, Act 13 of 1997, which normally takes time for Parliament to approve, the Minister of Finance has, in the interim, provided a guarantee of R15,2 billion to the DBSA.
In order to allow the Land Bank to effectively implement its turnaround strategy, the Minister of Finance announced support for the Land Bank with a guarantee of R3,5 billion which will be converted into a capital injection over the Medium-Term Expenditure Framework, MTEF, period. In December 2009, the Land Bank received R1 billion from the Adjustments Appropriation Act of 2009, reducing the guarantee to R2,5 billion. It has been allocated R750 million in the current financial year, a further R750 million in the next financial year and in the last year of the MTEF, R1 billion.
Chair, I would like to take this opportunity to congratulate the board of the Land Bank under the leadership of Dr Ben Ngubane and the chief executive officer, Phakamani Hadebe, for the good work they have done in turning this institution around.
The 2010 Fifa World Cup is an African event. Africa is the theatre and South Africa is the stage. The awarding of the right to host the 2010 Fifa World Cup to South Africa in 2004 was a great achievement in itself. Through television, radio, the internet and the print media, a further opportunity exists between 11 June and 11 July to showcase the country to billions of people all over the globe, including the key decision-makers in the global investment community. Even beyond this event, we will continue to work with the global investment community to attract much-needed funding for further economic growth.
Hosting the event also contributes to the development of skills, enhanced construction capacity, the creation of employment, and economic growth. For example, construction of the stadiums has sustained over 130 000 direct and indirect jobs between 2007 and 2010. Direct jobs accounted for the majority of jobs and was sustained at 66 800. Stadium construction had a R15 billion direct, indirect and induced economic impact. It is 30 days before the kick-off, and we want to thank those who have worked diligently to make the hosting of this event a reality. We are, indeed, ready to host this event.
Let me take this opportunity to thank Minister Gordhan for his steady hand in the Ministry of Finance, and officials from departments and entities reporting to this Ministry for the way they have demonstrated what public service means - working without expecting undue reward. We thank members of the Standing Committee on Finance and the Committee on Appropriations under the leadership of hon Thaba Mufamadi and hon Sogoni. We thank you for your valuable contribution. [Applause.]