Gauteng scores half a billion IT budget

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 28 Feb 2008

Gauteng finance MEC Paul Mashatile believes ICT is key to the province's future and in his budget vote this morning, he puts his money where his mouth is.

Mashatile says the province will spend at least half a billion rand on ICT over the next three years. The budget vote makes it clear several billion more can follow after some groundwork is done.

The amount forms part of a R31.5 billion investment over the medium-term to fund infrastructure projects that are expected to stimulate economic growth and job creation in the province.

The bulk of the half a billion rand - R450 million - is going to the Gauteng Shared Services Centre (GSSC) "to fund the implementation of the Gauteng online project".

Mashatile says the GSSC will also pay attention to the automation of the province's procurement systems. "This will be done in order to significantly reduce the time it takes to pay our suppliers and to make it easier to do business with government.

"Additional resources will be made available to the GSSC for the implementation of the Blue Umbrella/G-link project once all relevant plans have been finalised."

This is in contrast to last year when he allocated the project R93 million for the 2007 financial year that ends next month. It now appears that money may have gone unspent.

Gauteng premier Mbhazima Shilowa last week committed his government to providing "affordable broadband access" to 95% of the province's residents in the next five years.

Addressing the provincial legislature during his annual State of the Province address, Shilowa said: "This initiative will not only enhance economic growth and investment, but will also contribute to social development and improve the delivery of social services." He added that Gauteng Link would "add significantly to the province's GDP and job creation efforts by 2014".

The GSSC was also granted R16.2 million over the medium-term to improve security. The Department of Health, meanwhile, will get R6.2 million over the three years "to cater for carry-through costs in respect of the patient verification system"; a reference to the province's patient smart card project.

An amount of R30.2 million has also been set aside for the implementation of an integrated information management system in the provincial safety and liaison department. "We expect that this project will be completed in the 2008/9 financial year," Mashatile says.

Economic pressures

Gauteng remains the largest contributor to the national economy, adding more than a third to the country's gross domestic product.

Mashatile says Gauteng's economy grew 5.5% in 2004, 5.3% in 2005 and 6% in 2006. "After recording an impressive growth of 6% in 2006, the provincial economy is expected to have slowed down marginally in 2007, in response to the tighter monetary policy environment," he adds.

"In 2008, we expect the provincial economy to experience some challenges as a result of, among others, the electricity supply constraints."

Even so, he is upbeat the province will achieve its strategic goal of growing the provincial economy at a rate of 8% by 2014.

The MEC adds that Gauteng remains the country's most populous province, with an estimated population of 10.4 million, up from 9.1 million in 2001, representing a growth rate of 13.9%.

"We estimate that by 2014 Gauteng will be home to about 15 million people," he says. Meanwhile, unemployment in Gauteng has declined from a peak of 30.8% in 2003, to 22.6% in March 2007.

Mashatile adds that the province's projected revenue for the 2008/9 financial year is R47.1 billion, with the total estimated expenditure set for R46.7 billion.

"We estimate that, on average, provincial own revenue will grow at a rate of 5.4%, to about R8 billion over the medium-term expenditure framework period, ie the next three years. The province's total adjusted expenditure for 2007 amounted to R41.1 billion.

"This means we are making available an additional R5 billion to departments to spend during the coming financial year. We anticipate that for the 2008/9 financial year, we will record a surplus of R383.4 million," Mashatile says.

"Included in the surplus are funds that are earmarked for the establishment of the Global City Region Academy. These funds will be reallocated to the Department of Education during the adjustment budget process subject to the availability of relevant business plans."

Going to seed

Treasury will also receive R130 million over the medium-term "for the establishment of the Gauteng Fund project office".

The office "will explore alternative ways of financing for commercially viable strategic infrastructure projects in Gauteng," Mashatile says, including the Blue Umbrella/G-link project.

"An amount of R500 million will be made available later in the year as seed capital for the establishment of the Gauteng Fund.

"This amount is intended to assist the Gauteng Fund to raise an additional R6.5 billion from the private sector and parastatals. This has a potential to gear-in a further R35 billion through debt provision by private financial institutions."