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EPWP Incentive Grant 4th Quarter 2009/10 performance

18th May 2010

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1.0 EPWP incentive background

• EPWP incentive was introduced as part of Phase 2 to further enhance the creation of EPWP Full Time Equivalent work opportunities by Public Bodies ( 1 Full Time Equivalent = 230 Person days ). This was after the realization that NDPW had limited authority in Phase 1 to make Public Bodies meet their targets.

• R4.2 billion was allocated to NDPW over the MTEF ( 9/10 to 11/12) to pay out the incentive to public bodies and this is expected to grow to at least R 5 billion in the 13/14 financial year. R 5.4 Billion has been allocated over the 10/11 MTEF for the EPWP incentive.

• The fiscal incentive was applicable to infrastructure sector and non-state in the 09/10 financial year and has been rolled out to the social and environmental sectors from the 10/11 financial year. 2

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EPWP Fiscal incentive allocation over 09/10 MTEF

2009/10R’000

2010/11R’000

2011/12R’000

TOTALR’000

Provinces 151,419 400,000 800,000 1,352,419

Municipalities 201,748 554,000 1,108,000 1,863,748

Non-State Sector 195,000 359,621 308,740 863,361

Provision for Capacity to NDPW

22,033 33,149 56,000 111,182

Administration provision for intermediary

24,000 21,030 18,360 63,390

TOTAL 594,200 1,367,800 2,291,100 4,254,100

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2.0 EPWP Fiscal incentive principles• The EPWP incentive is based on paying all public bodies that

create work above a minimum threshold for the EPWP target group an incentive of R50 person day of work created. ( Rural Municipalities have no minimum threshold). For the 10/11 financial year, R 60 will be paid for rural municipalities.

• Eligible public bodies that want to participate in the incentive will enter into an agreement with DPW

• While indicative performance targets and incentive amounts are set for each eligible public body, they will only be able to claim the incentive upon proving that work has been created

• Basis for measuring EPWP performance– Number of FTE’s per million Rand of infrastructure budget,

taking into account the different portfolios of infrastructure and the rate at which each can contribute to employment creation

– Each public body ( apart from rural municipalities) must meet a minimum eligibility threshold before they can start accessing the incentive

– The incentive is not paid out for work created below the eligibility threshold, but is paid for all work created above this threshold

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2.0 EPWP Fiscal Incentive cont’d• Eligibility: In order for provinces and municipalities

to become eligible for the incentive they must:• Report to DPW on the EPWP ( 07/08 report used to calculate

incentive amounts for the 09/10 financial year).• Meet minimum employment creation targets based on their

available budgets

• Agreements: Eligible public bodies will enter into agreements with DPW which will specify:• Targets to be met by the public body• Amounts that can be claimed by the public body for reported EPWP

work created• Reporting and verification and audit requirements through the

EPWP Management Information System• EPWP workers may not be paid less than R50 per day

• Appropriation of funds• Eligible public bodies should incorporate the incentive allocation

into their budgeting and planning process but take into account that payment by DPW will occur quarterly, after employment has been created 5

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3.0 Fiscal incentive for Provinces• The average Full Time Equivalent for the different

infrastructure

portfolios ( e.g. Roads, Public Works, Education, Health) was considered in calculating the incentive amounts.

• Full incentive amount = ( FTE Target – FTE minimum threshold)

X 230 X 50.• DORA amount = 75% X Full incentive amount. • 4 Provinces, Western Cape, Gauteng, Limpopo and

Northern Cape did not meet the FTE minimum threshold and were allocated a nominal incentive amount of R 500,000.

• Total Incentive allocation to Provinces is R 151 Million.

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EPWP Phase 2

2007/08 EPWP

PERFOR-MANCE

PAYMENT THRES-

HOLD

FTE PERFORMANCE

TARGETS

TOTAL FULL YEAR

AMOUNTS

DORA ALLOCATION

      2009/10

   

Indicative allocation (if

100% of target is achieved)

-25% for Q4 for prov

 Infrastructure Only for 09-10 FTE’s   FTE’s (Entire Province)

-50% for Q4 for munis

FISCAL INCENTIVE TO PROVINCES 29,076 31,434 48,794 199,643 151,419

KwaZulu-Natal 11,716 6,791 16,551 112,240 84,180

Western Cape 919 2,003 2,003 0 500

Gauteng 348 2,594 2,594 0 500

Eastern Cape 7,660 5,836 9,314 39,989 29,992

Mpumalanga 1,407 2,760 3,345 6,730 5,047

Free State 3,967 2,407 5,075 30,678 23,008

Limpopo 1,335 5,208 5,245 417 500

North West 1,388 2,731 3,565 9,589 7,192

Northern Cape 336 1,103 1,103 0 500

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4.0 Fiscal incentive to Municipalities

• In order to cater for rural Municipalities in line with

comments from the Select Committee on Finance, the

following considerations have been considered:

- The FTE target for Metros per million rand of expenditure

is 6,

different from 3 considered for other Municipalities.

- The FTE minimum threshold for Rural Municipalities = 0.

- Full incentive = ( FTE Target – FTE minimum threshold) X

230 X 50.

• DORA amount = 50% x Full incentive amount. 8

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4.0 Fiscal incentive to Municipalities cont’d• 68 Municipalities including 6 metros were

allocated the incentive for the 09/10 financial year. Total incentive allocation to Municipalities for the 09/10 financial year was R 201.7 Million, of which R 147.2 Million was allocated to rural Municipalities and R 54.5 Million to Metros.

• 126 Municipalities are eligible for the incentive in the 10/11 financial year. Work being done to ensure more municipalities report so that they become eligible for incentive.

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5.0 EPWP 3rd Quarter 09/10 performance• 482,742 work opportunities were

reported in all sectors of the Expanded Public Works by the 3rd quarter of the 09/10 financial year. This represented 97% of the 500,000 work opportunity target that had been set by the President in the June 2009 State of the Nation Address.

• The target of 550,000 work opportunities that were expected for the 09/10 financial year have been achieved.

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Q3: Work opportunities per sector and province (Overall)

(1 April – 31st December 2009)

ProvinceEnvironment

& CultureInfrastructure Non-state Social TOTAL

EC 11,438 40,142 12,509 14,716 78,805

FS 3,519 7,103 4,147 11,182 25,951

GP 11,226 53,712 2,413 14,379 81,730

KZN 17,837 68,370 4,236 54,570 145,013

LP 5,658 9,947 2,499 22,927 41,031

MP 3,063 6,982 4,391 18,507 32,943

NC 3,262 9,186 354 5,875 18,677

NW 2,415 8,099 2,598 11,320 24,432

WC 7,622 13,986 562 11,990 34,160

TOTAL 66,040 217,527 33,709 165,466 482,742

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Q4: Work opportunities per sector and province (Overall)

(1 April 2009 – 31st March 2010)

ProvinceEnvironment

& CultureInfrastructure Non-state Social TOTAL

EC 13,742 47,812 21,410 16,969 99,933

FS 5,194 10,912 7,709 14,652 38,467

GP 18,337 66,782 2,909 20,373 108,401

KZN 26,547 75,288 6,674 63,771 172,280

LP 6,854 14,288 4,487 15,591 41,220

MP 3,551 7,967 10,765 21,266 43,549

NC 4,483 10,252 995 6,937 22,667

NW 3,815 12,562 2,272 18,962 37,611

WC 13,419 17,594 2,818 15,539 49,370

TOTAL 95,942 263,457 60,039 194,060 613,498

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5.1 Performance on the EPWP infrastructure Incentive after the 3rd quarter of the 09/10 financial year

• 5 out of the 16 Provincial Departments have been paid incentive payments

totaling R 53,633 million considering 3rd quarter payment reports. Total

payment to Provincial departments considering payments in previous

quarters is R116.6 million out of an allocation of R 151.4 million (77% of

Provincial allocation).

• 47 of the 68 eligible municipalities have been paid their incentive payment of

R 78.6 million considering the 3rd quarter report of the 09/10 financial year.

Total incentive payment to municipalities after the 3rd quarter is R 114.17

million out an allocation of R 201.7 million ( 57% of Municipal allocation).

• Total incentive payment to Provincial Departments and Municipalities made

for the 09/10 financial year totals R 230.8 million, out of the total allocation of

• R 352.1 million, representing expenditure of 66% of the allocation for the

09/10 financial year.12

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Province Incentive allocation for the 09-10 financial year(R’000)

Incentive payment after 3rd quarter 09-10(R’000)

Incentive payment for 3rd quarter 09-10 ( R’000)

Eastern Cape 29,992 17,457 15,381

Free State 23,008 0 0

Gauteng 500 0 0

KwaZulu-Natal 84,180 84,854 35,100

Limpopo 500 0 0

Mpumalanga 5,047 0 0

Northern Cape 500 0 0

North West 7,192 0 0

Western Cape 500 14,269 3,152

Total 151,419 116,581 53,633

Performance on the EPWP incentive grant by Provinces after 3rd Quarter 09/10 financial year

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Province Incentive allocation for the 09-10 financial year(R’000)

Incentive payment after 3rd quarter 09-10(R’000)

Incentive payment for 3rd quarter 09-10 (R’000)

Eastern Cape 53,559 7,818 3,905

Free State 9,073 1,956 1,047

Gauteng 34,881 59,875 51,038

KwaZulu-Natal 39,974 26,102 15,038

Limpopo 18,328 6,140 2,626

Mpumalanga 13,454 2,453 1,468

Northern Cape 15,496 5,769 960

North West 9,694 2,787 1,493

Western Cape 7,289 1,271 708

Total 201,748 114,170 78,644

Performance on the EPWP incentive grant by municipalities after 3rd Quarter 09/10 financial year

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5.2 Performance on the EPWP infrastructure Incentive after the 4th quarter of the 09/10 financial year

• 8 out of the 16 Provincial Departments will be paid incentive payments totaling R

54.551 million considering EPWP 4th quarter report for the 09/10 financial year . Total

payment to Provincial departments considering payments in previous quarters is

R171.132 million out of the full incentive allocation of R 201.892 million for 09/10

reporting ( 85% of the full allocation). This payment includes 4th quarter payment paid in

the 10/11 financial year.

• 36 out of the 68 of the eligible municipalities will receive a total incentive payment of

R93.463 million considering the 4th quarter report for the 09/10 financial year.

• Considering the 4th quarter report ( 3rd quarter for municipalities) 56 of the eligible 68

municipalities will have accessed R 207.61 million out of the available R 302.383

million available in the 09/10 municipal financial year ( 69% of the allocation for the

municipal financial year). This is comparable to the 75% of allocation expected to be

paid after 3 of the 4 quarters in the municipal financial year.15

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• The EPWP incentive grant is beginning to have the intended performance of encouraging Public bodies to exceed their Full Time Equivalent ( FTE) work opportunity targets. Provincial Departments in KZN, GP, WC and EC have exceeded their targets and have paid extra incentive amounts.

• 11 of the 68 eligible municipalities in GP, KZN, LP, NW and WC have already exceeded their FTE targets by the 4th quarter of reporting ( 3rd quarter of municipalities) for 09/10.

• The number of Municipalities that will access the incentive will increase to 126 municipalities in the 10/11 financial year from the 68 municipalities in the 09/10 financial year.

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Province Full Incentive allocation for the 09-10 reporting including 4th quarter payment in 10/11 (R’000)

Incentive payment after 4th quarter 09-10(R’000)

Incentive payment for 4th quarter 09-10 ( R’000)

Percentage of 09/10 full incentive paid (%)

Eastern Cape 39,989 34,789 17,332 87

Free State 30,678 0 0 0

Gauteng 667 2,498 2,498 375

KwaZulu-Natal

112,240 115,259 30,269 103

Limpopo 667 2,617 2,617 393

Mpumalanga 6,730 0 0 0

Northern Cape

667 0 0 0

North West 9,589 0 0 0

Western Cape

667 15,969 1,700 2395

Total 201,892 171,132 54,551 85

Performance on the EPWP incentive grant by Provinces after 4th quarter 09/10 reporting

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Province Incentive allocation considering 09/10 municipal financial year (R’000)

Incentive payment after 4th quarter 09-10(R’000)

Incentive payment for 4th quarter 09-10 ( R’000)

Percentage of 09/10 full incentive paid (%)

Eastern Cape 80,339 16,778 8,961 21

Free State 13,609 2,093 137 15

Gauteng 52,077 99,081 39,208 190

KwaZulu-Natal

59,962 50,572 24,469 84

Limpopo 27,495 17,358 11,240 63

Mpumalanga 20,181 247 34 12

Northern Cape

23,244 5,801 32 25

North West 14,541 11,581 8,797 80

Western Cape

10,934 1,855 584 17

Total 302,383 207,610 93,463 69

Performance on the EPWP incentive grant by Municipalities after 4th quarter 09/10 reporting ( 3rd quarter 09/10 for municipalities)

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6.0 Measures put in place to improve performance on EPWP incentive draw down

• Public bodies ( Provincial Departments and Municipalities) are being provided with support to report on EPWP

• A partnership with DBSA through the Siyenza Manje programme has been put in place to support municipalities jointly.

• Training of officials in Municipalities in Labour-intensive methods of construction is being planned with LG-SETA.

• 90 data capturers have been employed in this regard

• Training on reporting is also being done to Public body officials to enable them to report better on EPWP.

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NEW MTEF Conditional Grants & Specifically & Exclusive Appropriation

2010/11R’000

2011/12R’000

2012/13R’000

Conditional Grant

EPWP: Infrastructure Grant: Local Gov Prov Gov

622 996331 004

1 108 000800 000

1 163 400840 000

EPWP: Social Sector 56 637 - -

Devolution of Property Rates

1 096 192 1 161 964 1 220 062

Specifically & Exclusively Appropriated

IDT 10 515 9 180 9 602

EPWP Non State Sector 179 811 154 370 161 471

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I thank you

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