11TH PUBLIC SECTOR INNOVATION CONFERENCE
“Showcasing creativity and innovation in service delivery”
REVENUE ENHANCEMENT STRATEGY
BY: MASEKOAMENG RC
EMPERORS PALACE, GAUTENG 31 AUGUST 2017
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Outline of the presentation
• Introduction• Significance of effective revenue enhancement • Triggers of LP Revenue Enhancement Strategy• Innovation of the Project• Impact of the Strategy - Yields• Contribution to service delivery• Sustainability of the project• Replicability• Challenges and lesson learned• Conclusion
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Introduction
Innovation is the implementation of creative ideas in order to generate value, usually through
increased revenues, reduced costs or both.
“Jeffrey Baumgartner”
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“IF IS NOT FOR PROFIT, IS IT FOR LOSS?”
“IF WE CANNOT GENERATE AND ENHANCE REVENUE, WHO SHOULD GENERATE REVENUE FOR
PROVISION OF SERVICES TO OUR CITIZENRY”
Why is it important to collect and manage revenue effectively?
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Why is it important to collect and manage revenue effectively?
• Lifeblood of any business – Cash flow.• Service delivery machinery.• Compliance to financial legislations.• Audit queries.• The declining Provincial Share of Revenue• The increasing developmental needs of
citizenry – Budget Pressures58/31/2017
The role of Government in revenue enhancement
• Government plays an important role in the economy in gathering andallocation of resources and ensuring efficient utilization of theavailable resources.
• This happen duly because of the economic problem “scarcity factor”.
• On account of scarcity of resources it has become increasinglyimportant for government to raise revenue and ensure itssustainability.
• Provincial receipts comprises of Equitable Share, ConditionalGrants and own revenue.
• In terms of Section 228(1) of the Constitution, ProvincialGovernments have the authority to raise Own Revenue.
• Own revenue is collectible from 13 Depts. and 3 Public Entities.68/31/2017
What prompted the development of Revenue Enhancement Strategy?
• Limpopo own revenue contribution to the total provincial receiptswas assessed and found to be low at 1.4 percent in 2012/13 ascompared to the National norm of 4 percent.
• The declining provincial share of revenue also considered itnecessary for Limpopo to develop strategies for own revenueenhancement.
• Own revenue collection is essential to augment the decliningequitable share.
• Cash flow challenges encountered in 2011/12 financial year.
• Provincial Revenue Enhancement Strategy was then developed inconsultation of Depts. and Public Entities (Benchmarking andResearch).
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Limpopo Revenue Enhancement Strategy : Executive Summary
• Provincial Revenue Enhancement Strategy was endorsed by EXCO perdecision no. 60 of 2013/14.
• The Strategy serves as a turnaround plan to maximize provincial ownrevenue.
• The Strategy was rolled out to departments and public entities through theBudget and Revenue Forum, CFO forum and HOD forum.
• The ambition of the strategy was that the provincial collection target shouldreach “R1 billion mark’’ by 2017/18 financial year.
• The R1 billion “mark” was attained in 2014/15 resulting from Strategyimplementation.
• Provincial revenue contribution to the total provincial receipts also improvedfrom 1.4 percent in 2012/13 to 1.9 percent in 2016/17 financial yearcompared to the current national norm of 3 percent.
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Innovative Endeavours
• Development of Provincial Revenue Enhancement Strategyendorsed by EXCO.
Prior to the 2013/14 financial year the Province did not have the revenueenhancement strategy.
The Strategy was not developed due to a requirement of any National orProvincial Policy or directive.
• Seven strategic objectives identified to support and fulfill revenueenhancement
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Innovative Endeavours
High road’ forecasting
Provide support on the review of
SOEs SLAs
Revenue Enhancement Objectives
Conduct research on alternative
revenue streams
Revenue management information
systems
Support revenue generating endeavours
Department and public entities
Monitor the transfer of own revenue by public entities and surrenders
of unspent funds
Ring fence funds for revenue projects
Innovative Endeavours cont.
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Strategy Objectives Strategy implementation
1.Monitor surrender of accumulatedsurpluses and own revenue for PublicEntities
Schedule 3C Public Entities retained fundsand spent without being appropriated byLegislature as required by theLegislations.Provincial Treasury Instruction note
number 2 of 2013/14 was issued enforcingEntities to surrender accumulatedsurpluses into the PRF
2.Provide support on the review ofSLA’s between departments andEntities
Assessment of SLA agreement to ensureown revenue collected is transferred intothe Provincial Revenue Fund
Facilitated the review of Service LevelAgreements (SLA) entered into betweenEconomic Development and PublicEntities.
Innovative Endeavours cont.
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Strategy Objectives Strategy implementation
3.Conduct research onalternative revenue streams
Desktop Research and site visits to areas that hindersrevenue generation, provide recommendations andsupport departments in implementation thereof.
4.Support revenue generatingendeavours
Introduced quarterly revenue enhancement bilateralmeetings to support the identification of revenueenhancement projects (Also HODs and MECs meetings).
5.Improve revenue informationmanagement systems
Provided funding for improvement of PHIS for promptbilling of patient fees.RIMS (Motor Vehicle Licenses Management)Electronic Data Interchange (EDI) and Patient Verification
System (PVS) to improve turnaround time on billing andsubmission of claims and ensuring correct classification ofpatients
Innovative Endeavours cont.
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Strategy Objectives Strategy implementation
6.Promote ‘High road” forecasting This provide opportunities to identify RevenueEnhancement Projects.
Departments should provide conservative and optimisticown revenue estimates.
Departments provides high revenue estimates predictingthe benefits in the case collection blockages areremoved.
7. Ring-Fencing of funds Introduced “Revenue Enhancement Allocation” to fundrevenue enhancement projectsensures that Limpopo Province invest in the identified
provincial government feasible projects and systemsthat have potential for generating more revenue
.
“Funds are only utilised for intended purposes”
Innovative Endeavours cont.RING-FENCING OF FUNDS “ FUNDS ARE ONLY UTILISED FOR INTENDED PURPOSES”
DEPARTMENT FINANCIALYEAR
PROJECT AMOUNT
Transport 2013/14 Rollout of motor vehicle licencing functionto 50 Post Offices
Upgrading of 4 provincial traffic stationsat Mokopane, Thohoyandou, Northamand Dilokong
Conducting of feasibility study forconstruction of weigh bridges
R3.1 million
R0.870 million
R2.0 million
2014/15 Construction of three weighbridges R30.0 million
2015/16 Construction of weighbridges
acquisition of / procurement of RevenueInformation Management System forMotor Vehicle Licencing administration
R30.0 million
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Innovative Endeavours cont.RING-FENCING OF FUNDS “ FUNDS ARE ONLY UTILISED FOR INTENDED PURPOSES”
DEPARTMENT FINANCIALYEAR
PROJECT AMOUNT
EconomicDevelopment, Environment and Tourism(LEDET)
2013/14 Support implementation of ProvincialTreasury Instruction Note of 2012/13 and2013/14 on surrender of accumulatedsurpluses by Schedule 3C public entities.
R14.9 million
2014/15 Support implementation of ProvincialTreasury Instruction Note of 2012/13 and2013/14 on surrender of accumulatedsurpluses by Schedule 3C public entities.
Funding of operational needs for 11 resorts(LTA) and reconstruction of access bridgeat Mphephu Resort(collapsed due to floods)
R17.1 million
R5.2 million
2015/16 To cater for operational needs of the elevenresorts for Limpopo Tourism Agency (PublicEntity).
R14.6 million
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Innovative Endeavours cont.RING-FENCING OF FUNDS “ FUNDS ARE ONLY UTILISED FOR INTENDED PURPOSES”
DEPARTMENT FINANCIALYEAR
PROJECT AMOUNT
Health 2013/14 Appointment of two contract casemanagers and nineteen temporarybilling clerks
Recruitment of fifty revenue criticalposts.
Improvement of Patient AdministrationSystem functionality
R3.5 million
2014/15 Appointment of revenue critical posts –Case managers and revenue billingstaff.
Improvement of Patient AdministrationSystem functionality
Procurement of patient verificationsystem and Electronic Data Interchange
R15.2 million
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Innovative Endeavours cont.
RING-FENCING OF FUNDS “ FUNDS ARE ONLY UTILISED FOR INTENDED PURPOSES”
DEPARTMENT FINANCIALYEAR
PROJECT AMOUNT
Health 2015/16 Appointment of revenue critical postsand the improvement of hospitalmanagement administration system.
R15.3 million
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Enhanced Strategy Impact
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Transport
•Extension of Motor Vehicle Licencesto 50 Post Offices.
•Post Offices levy a commission of11% compared to 20 percent ofmunicipalities.
•Upgrading of provincial trafficstations at Mokopane, Thohoyandou,Northam and Dilokong increasedaccessibility of services and thusrevenue (registration and licensing).
LEDET
•Infrastructure improvement ofLimpopo Wildlife Resorts.
•Construction of Mphephuresort bridge provided publicaccess to recreationalfacilities and thus revenue.
•Purchase of bedding,consumables andmaintenance of facilitiesimproved client satisfactionand retention.
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Enhanced Strategy Impact
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Health
•Appointment of Case Managers andtemporary billing and record staff improvedcollection and record management.
•Appointment of Debt collector improvedrecovery of Road Accident Fund patient feedebts.
•Upgrading of Health Billing Systemimproved server performance.
Agriculture
•Redirecting revenuecollected by twoagricultural colleges intothe provincial revenueFund.
• Surrendering of accumulated surpluses by public entities at year end as well as unspent funds by implementing agencies.
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Enhanced Strategy Impact
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Departments (Votes)
Description
Actual own receipts as
at 31 March 2011
Actual own receipts as
at 31 March 2012
% collection
of adjusted budget
Actual own
receipts as at 31
March 2013
Adjusted appropria
tion
Actual own receipts as
at 31 March 2014
% collection
of adjusted budget
Adjusted appropriation
Actual own receipts as
at 31 March 2015
% collection
of adjusted budget
Adjusted appropriatio
n
Actual own receipts as at
31 March 2016
% collection
of adjusted budget
Adjusted appropriatio
n
Actual own receipts as
at 31 March 2017
% collection of adjusted
budget
R thousand
Departmental Own Receipts
Office of the Premier 2,240 2,691 107.0% 1,823 654 1,369 209.3% 720 1,069 148.6% 1,272 1,836 144.3% 1,239 1,186 95.7%
Provincial Legislature 201 679 220.5% 323 257 176 68.5% 144 188 131.3% 291 316 108.6% 331 186 56.2%
Education 39,425 48,755 160.4% 41,845 44,612 40,179 90.1% 52,164 38,192 73.2% 50,291 63,782 126.8% 63,673 67,476 106.0%
Agriculture & Rural Development 11,477 10,336 95.2% 6,228 9,316 5,050 54.2% 8,497 7,419 87.3% 7,835 13,221 168.7% 9,956 13,099 131.6%
Provincial Treasury 120,504 29,771 116.6% 124,373 137,090 190,997 139.3% 214,576 299,231 139.5% 236,815 302,846 127.9% 362,528 407,783 112.5%Economic Development, Environment & Tourism 42,830 46,626 118.3% 50,035 77,506 97,577 125.9% 139,377 146,423 105.1% 146,376 124,556 85.1% 156,883 123,470 78.7%
Health 113,416 115,684 108.0% 130,618 120,708 121,559 100.7% 140,850 137,643 97.7% 160,131 135,609 84.7% 174,076 169,761 97.5%
Roads & Transport 229,319 301,926 111.2% 301,569 356,456 349,981 98.2% 402,208 397,788 98.9% 423,666 419,630 99.0% 465,198 470,730 101.2%
Public Works, Roads & Infrastructure 18,008 20,342 116.2% 34,599 28,797 27,624 95.9% 420,356 382,482 91.0% 164,833 156,872 95.2% 193,210 187,679 97.1%
Safety, Security & Liaison 166 395 238.0% 351 82 362 441.5% 171 254 148.5% 270 254 94.1% 160 169 105.3%
Co-operative Governance, Human Settlements &Traditional Affairs 2,495 5,363 138.0% 6,772 2,500 4,560 182.4% 2,925 3,135 107.2% 5,602 35,987 642.4% 6,079 8,715 143.4%
Social Development 2,483 3,303 142.7% 3,272 2,511 3,832 152.6% 5,182 6,888 132.9% 3,105 3,424 110.3% 18,948 14,624 77.2%
Sport, Arts & Culture 1,245 702 116.0% 1,448 910 1,108 121.8% 1,948 1,682 86.4% 1,134 1,688 148.9% 2,787 2,086 74.8%
Total Own Receipts 583,809 586,573 114.6% 703,256 781,399 844,374 108.1% 1,389,117 1,422,395 102.4% 1,201,621 1,260,021 104.9% 1,455,068 1,466,961 100.8%
2012/132011/12 2013/14 2014/15 2015/162010/11
Historical Trends by Vote
2016/17
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Enhanced Strategy Impact - Graphical
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National Collection TrendsSummary of Province's Own Receipts Trends
R'000
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Average %
increase 2010/11-2015/16
Average %
increase 2010/11-2016/17
CurrentEastern Cape 747 565 845 876 1 100 678 1 074 612 919 640 964 711 1 182 222 1 182 222 1 290 265 4.3% 6.3%Free State 809 355 865 214 858 279 889 019 900 855 949 677 1 029 710 1 029 710 1 062 519 2.7% 6.1%Gauteng 2 838 931 3 615 241 3 991 740 4 345 877 4 265 929 4 568 931 5 060 965 5 060 965 5 369 746 8.3% 7.3%Kwazulu-Natal 2 041 364 2 726 959 2 642 483 2 804 786 2 783 644 2 994 279 3 026 189 3 026 189 3 176 723 6.6% 4.2%Limpopo 584 676 599 841 703 255 844 374 1 422 395 1 260 021 1 063 103 1 180 729 1 180 729 13.7% 11.8%Mpumalanga 528 141 561 161 667 819 771 926 762 819 799 688 864 531 864 531 909 415 7.2% 5.6%Northern Cape 216 340 225 666 269 908 425 878 279 438 294 499 313 602 313 602 331 843 5.3% -8.0%North West 598 489 718 235 944 833 1 158 968 961 452 1 019 208 1 074 720 1 074 720 1 146 121 9.3% -0.4%Western Cape 2 067 681 2 228 649 2 236 385 2 460 390 2 139 999 2 170 624 2 435 813 2 435 819 2 438 505 0.8% -0.3%Total Own Receipts 10 432 542 12 386 842 13 415 380 14 775 830 14 436 171 15 021 638 16 050 855 16 168 486 16 905 866 6.3% 4.6%
Provinces collecting below Limpopo Province 2 2 2 3 5 5 4
Audited Outcome Medium-term estimates
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Positive contribution to service delivery
• Provincial own revenue forms part of the total Provincial Share ofRevenue that are allocated to departments to address provincialspending priorities.
• Augments the share of revenue, i.e. equitable share and conditionalgrants and ultimately contributes to improvement of service deliveryfor the people of Limpopo Province.
• Thus the increase in revenue lessens the provincial budgetpressures and contribute to an improved provision of services to thepeople of the Province
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Positive contribution to service delivery
• The extension of motor vehicle license function by Transport to PostOffices (SAPO) contributed to improved service delivery as follows:– Enhanced public access to services and reduced customer waiting time– Increased provincial own revenue– Capacity building to SAPO officials (Training on E-Natis)– Creation job opportunities (poverty alleviation)
• Appointment of critical revenue staff (Health)– Creation of job opportunities (Case managers, Revenue billing and record staff)– Capacity building– Improved record management and accounts reconciliation– Improved audit findings in 2014/15 financial year– Increased provincial own revenue
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Positive contribution to service delivery• Improvement of Health patient billing system
– Improved collection of revenue though accurate billing system– Improved waiting time– Job creation and economic empowerment (poverty alleviation)– Capacity building of officials– Software infrastructure development
• Construction of an access bridge (Mphephu Resort) and increasedbudget for resort operational needs (Limpopo Wildlife Resorts):– Improved access to services– Creation of job opportunities and alleviation of poverty– Improved infrastructure tourists inflow and thus increased revenue collection
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Long Term Sustainability
• Revenue Enhancement bilateral meetings are scheduled quarterly withdepartments and public entities to ensure continuous monitoring of the project– particularly potential revenue generating departments (Health, Public Works,Transport, LEDET, Public Entities and Agriculture).
• Provincial Treasury, departments and public entities determine revenue targetsjointly and the collection performance is monitored on monthly basis.
• Provincial Treasury provides both support and monitoring to ensureachievement of revenue targets and sustainability of revenue enhancementproject.
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Long Term Sustainability cont.
• Revenue enhancement is a standing item in Provincial forums(budget and revenue forum, CFO forum, HOD forum, MECsperformance review meetings).
• The Province has commenced the reviewing of the RevenueEnhancement Strategy to include an Incentive Scheme forretention of revenue surpluses.
• The Unit work as a team and share the same sentiments ofproviding support and monitoring department on revenuegeneration endeavors.
• Moreover, Revenue Strategy is under review toincorporate revenue retention strategy.
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Replicability
• The project is replicable to:
– Other Units : Presentation made to Municipal Finance Unit forbest practices.
– Other Departments: Departments and public entities aredeveloping own revenue enhancement strategies.
– Other Provinces : LPT presented during the National RevenueWorkgroup for best practices as requested by National Treasury
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Challenges• Resistance to change – Comfort Zone (Focus was on expenditure
compared to revenue generation and management)
• Inadequate capacity to implement revenue enhancement projects (Poorplanning by departments and lack of proper feasibility study).
• Some departments and public entities consider revenue collection as theresponsibility for Provincial Treasury.
• Inadequate human resource capacity (staffing of the Fiscal Developmentunit) to explore maximally.
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LESSONS LEARNED• change before and during the project implementation
processes.• Inadequate project planning and capacity led to some
departments and entities refraining from implementing revenueenhancement projects.
• Hard work and perseverance is a good recipe for success.• Research is critical prior and during implementation of the
project.• Continuous research in the identification of new sources of
revenue and to keep abreast with current trends.• Departments, Public Entities and Provincial Treasury must
work together to realize the objectives of the RevenueEnhancement Strategy.
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Revenue Enhancement project: MphephuResort – old bridge
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Revenue Enhancement project: MphephuResort – New bridge
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Own revenue not Rubbish
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LPT: DEPT INNOVATOR 2016
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CPSI: 2016 INNOVATOR OF THE YEAR
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Allocation of Prize won to Departments
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Conclusion• The Limpopo Provincial Own Revenue Enhancement Strategy
remains an instrument to enhance revenue generation, strengthenexisting control processes and creates avenues for new revenuestreams.
• The implementation of the Revenue Enhance Strategy has yieldedpositive results and it remains the main tool to augment the equitableshare.
• It is worth noting that, in order for Provincial Treasury to obtainnecessary support and share common understanding with relevantstakeholders, extensive communication both in writing and throughmeetings were necessary.
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“IF YOU WANT TO GO FAST, GO ALONE. IF YOU WANT TO GO FAR, GO TOGETHER”
38
Thank you
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