Amid a devastating cash crunch, the KwaZulu-Natal treasury has intervened in the financial affairs of the Department of Education. The treasury announced that the department will now be restricted from basic spending, including purchasing desks or other assets.

The treasury intervened as the education sector faces a deepening financial crisis, owing millions of rand to suppliers—some for more than a year. It is understood that the department has “accruals and payables” amounting to R2.3 billion and at least R1.2 billion of this amount is overdue from 2023. The department was recently bailed out by the provincial government so that it could pay the norms and standards provisioning to schools. The education department attributed the ongoing crisis to budget cuts imposed by the national government over recent years. As a result of these cuts, the department has lost close to R26 billion and anticipates losing another R5 billion in the coming years.

In a statement, the treasury indicated that by March this year, the education department had overspent its budget, prompting the intervention. It stated that it has legislated powers and responsibilities in terms of section 18 of the Public Finance Management Act (PFMA), which includes that the treasury must “exercise control over the implementation of the provincial budget”. “Following an analysis of the challenges facing the Provincial Department, including its inability to remedy its financial situation, Treasury invoked section 18 of the PFMA against the Education Department.”

“Therefore, the treasury has withheld all funding to the department, but this excludes funds to pay for employee compensation costs, conditional grants (including the National School Nutrition Programme grant), and transfer payments to schools.” Salary payments account for close to 90% of the department’s budget. When asked to clarify the impact of the budget withheld, Treasury officials stated that the department would be unable to purchase mobile classrooms, construct new schools, or acquire bulk computers, desks, and chairs in some cases.

The education department has not responded to requests for comment on the matter.

Chief financial officer of the department, Yali Joyi, recently informed the members of the finance portfolio committee in the KZN legislature that the department is facing challenges and has made so many cuts to services that it is now “scraping the bottom.” The Head of Department, Nkosinathi Ngcobo, expanded on the impact of the cuts. He stated that despite school population growth and a diversified curriculum, the department has “not increased the number of teachers for more than 15 years” and more teachers were needed. However, he said at the same time the wage bill took the biggest part of the department’s budget.

IFP Member of the finance committee Lourens De Klerk remarked, “Your (department’s) view is the fatalist view; this department has always been a champion of wrongdoing, and not one of your turnaround plans has worked. You are going to crash.” “There are unpaid invoices that have been outstanding for a year. If companies are not paid, they go bankrupt; companies cannot go unpaid for a year. I am going to stop here; I am going to cry,” he said.

Chairperson of the committee, Mthandeni Dlungwana, expressed concern about the current situation. “What is happening here is clear: the overspending is very high but has shifted to accruals. Invoices are being held. You are saying to us R2.3 billion in invoices have not been paid because there is insufficient cash. How do you spend money you do not have? How can service providers survive for the whole year if they have not been paid? R1.2 billion in invoices has been lying idle since 2023, and over R900 million of invoices have not been paid for a year.”

MEC Sipho Hlomuka, speaking at the meeting with the Finance Committee members, stated that the department will not stop accruing debts because of the allocation they are receiving. “We are working on a deficit because of the cuts that have happened.”

THE MERCURY

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