THE UTILIZATION OF THE BUDGET TO MEASURE PERFORMANCE, MONITOR

AND EVALUATE TO IMPROVE SERVICE DELIVERY IN SOUTH AFRICA

CONTENTS

Page

1. INTRODUCTION 1

2. DEFINING THE CONCEPTS PERFORMANCE BUDGETING,

SERVICE DELIVERY AND MONITORING- AND EVALUATION 2

2.1 Performance Budgeting (PB) 2

2.2 Service delivery 3

2.3 Monitoring and Evaluation (M&E) 4

3. THE DEVELOPMENT OF PERFORMANCE BUDGETING AS A

STRATEGIC MANAGEMENT TOOL 5

4. THE IMPORTANCE OF PERFORMANCE BUDGETING AND

MEASUREMENT WITHIN THE GOVERNMENT SYSTEM 7

4.1 Regulatory compliance 7

4.2 Performance budgeting as integral part of the government's

administrative process 9

4.3 Performance measurement in the public sector 11

4.4 Service delivery and performance measurement in Local government 13

5. THE USE OF MONITORING AND EVALUATION TO IMPROVE

PUBLIC SECTOR PERFORMANCE 14

6. CONCLUSION 15

7. REFERENCES 17
THE UTILISATION OF THE BUDGET TO MEASURE PERFORMANCE,
MONITOR AND EVALUATE TO IMPROVE SERVICE DELIVERY

1. INTRODUCTION

Service delivery in South Africa remains one of the more contentious issues within the
realm of government policy implementation. Depending on the political frame of
reference, different opinions on the success or failure of service delivery policies are
voiced almost daily. After the adoption of the Constitution of the Republic of South Africa,
1996 (hereinafter referred to as the Constitution), great strides have been made in terms of
service delivery. Within the public service environment, initial challenges were based on
legislative and policy development that were specifically aimed at institutional
realignment.

Since 2004, the public service environment have been characterised by the improvement of
implementation capacities and the need to further develop mechanisms to monitor and
evaluate the impact of these policies. The new mechanisms undoubtedly focused on
service delivery issues and ways to improve access to government-initiated programmes
aimed at sustainable development within the developmental state. During the opening of
Parliament in 2005 it was emphasised that a new urgency would characterise the
promotion of service delivery and the elimination of poverty in South Africa. The
Presidency and the Departmental Directors-General already indicated then that they would
undertake a fundamental review of how effectively various government institutions were
executing their developmental mandates. Communities now have access to more resources
than before. Government has also committed itself to further improving service delivery
and South Africa is now seen as a leader in the creative application of public
administration procedures, through legislation and processes, to address the needs of the
broader citizenry.

The African National Congress (ANC) 2009 Election Manifesto, Working together we can
do more (hereinafter referred to as the ANC's 2009 Election Manifesto), states that,
although government has made progress in terms of service delivery since 1994, there
remains much to do to reach previously established goals. Core key objectives of the
ANC's 2009 Election Manifesto includes the improvement in the quality of services that
government provides, the creation of decent work opportunities, addressing poverty and
 2

hunger, the establishment of sustainable livelihoods and the prioritising of education are
central to improve the potential of all citizens to contribute productively in building the
South African nation. The success of these objectives will not only depend on the
alignment of the budgetary process to build and accelerate sustainable and equitable
economic growth, but also through the merging of economic and social programmes.
Performance budgeting and a dedicated monitoring and evaluation process will therefore
be central to achieving the objectives and ultimate success of newly established
programmes.

To better understand the utilisation of the budget as an instrument to measure performance,

monitor and evaluate to improve service delivery, performance budgeting, service delivery
and monitoring and evaluation (M&E) will be defined as a starting point for the subsequent
analysis. The development of performance budgeting as a strategic management tool and
the importance of performance budgeting and measurement within the government system
will also be discussed. Finally, the use of the M&E system as a tool to improve public
sector performance will be analysed.

2. DEFINING THE CONCEPTS PERFORMANCE BUDGETING, SERVICE

DELIVERY AND MONITORING- AND EVALUATION

A conceptual analysis of the terms performance budgeting, service delivery and M&E is
essential before the utilisation of the budget as a strategic measuring tool to improve
service delivery is discussed.

2.1 Performance Budgeting

Performance budgeting has been interpreted differently at different times and in different
countries. At the broadest level, according to Diamond (2003:3), performance budgeting
can be associated first with a budget presentation that emphasises the outputs rather than
inputs associated with a government's operations and second with a restructuring of a
government's operations on the basis of programmes and activities producing these
outputs. However, in their definition of performance-based budgeting, Robinson & Last
(2009:3) focus on the attainment of governmental objectives (outcomes) as opposed to
outputs only when they state that it "aims to improve the efficiency and effectiveness of
public expenditure by linking the funding of public sector organisations to the results they
deliver, making systematic use of performance information".
 3

Maila (2006:40) further states that both reason (triggers) and resources are inputs that are
essential to produce output, ultimately achieving the consequence. An order initiates a core
process to deliver on societal needs or requirements, either internally or externally. This
approach can be compared to the systems approach that was popularised by Ludwig von
Bertalanffy in the 1950s as "general systems theory". According to Smit, De J Cronjé,
Brewis & Vrba (2007:39), the systems approach to management views an organisation as a
group of interrelated parts with the single purpose to remain in balance where the action of
one part influences the other parts causing imbalance. This approach depicts the
organization as a system that comprises four elements, including input (resources);
transformation process (internal processes and procedures within the system); outputs
(products or services); and feedback (reaction from the environment).

Shah & Shen (as cited in Nkoana, 2007:3) defines performance budgeting as "a system of
budgeting that presents the purpose and objectives for which funds are required, the costs
of programmes and associated activities proposed for achieving those objectives and the
outputs to be produced or services to be rendered under each programme". Nkoana
(2007:3) elaborates by stating that performance budgeting is about emphasising outcomes
as opposed to outputs associated with government expenditure and that the implementation
of performance budgeting requires a dedicated transparent and accountable process.

2.2 Service delivery

The term service delivery is used almost daily depending on the experience and context of
referral from the individual's viewpoint. It is therefore important to define service delivery
within the context of intergovernmental relations as it impacts on the budgetary process. In
1994, the elected government inherited a fragmented national public service that had to be
amalgamated to form a national unified public service. New public service legislation
based on practices and principles were introduced, ultimately leading to the substantial
development of all three spheres of government within the intergovernmental relations
framework. However, despite these reforms, progress in improving results in terms of
service delivery, especially to marginalized communities, differed.

According to the Collins Paperback English Dictionary, 1993 (as cited by Maila,
2006:40), the description of service can be articulated in many ways, namely to provide
assistance or help; the action of an organization or system that provides something needed
 4

by the public; the availability for use by the public; and a department of public
employment and its employees. Maila (2006:40) further states that a service can also be
described as a job - the rendering a specific service as part of the broader system within
government in which it is required from the public servant to fulfill a specific function.
Langdon (cited in Maila, 2006:40), states that deliverable (as a concept) describes outputs
as synonymous with performance, where an output can be equated with the reason for the
existence of a specific business or organisation and in which the result of the output being
that which is delivered. To produce output, and the ultimate deliverable(s), resources
(inputs) such as material, ideas, knowledge and equipment are required.

Service delivery, therefore, has taken prominence throughout the intergovernmental

relations framework, specifically within the sphere of local government. According to
PricewaterhouseCoopers' document, The road ahead for service delivery: delivering on the
customer promise (2007:1), reforms in the public sector aimed at improving service
delivery have gained prominence, not only in South Africa, but also internationally.
Citizen expectations have increased and these include transcend economic status,
geographical funding - specifically within the local sphere of government - and the overall
management and delivering of these services. The PricewaterhouseCoopers analysis also
identified five strategic enablers necessary for "delivering on the customer promise". These
include customer-centricity (understanding the customer); connected government (pulling
down the walls); building capacity (empowering the institution); delivering on the promise
(realising the benefits through appropriate modelling); and innovation (continuous
improvement).

2.3 Monitoring and Evaluation (M&E)

Programme coordination and institutional oversight remains paramount to the success of

government initiatives. Addressing the developmental challenges in South Africa require
of government to constantly monitor and evaluate development solutions. Project M&E,
therefore, remains an essential component of project- and programme management.
Already in 2004, the Cabinet initiated plans for a monitoring and evaluation system for
government and The Presidency subsequently developed the government-wide Monitoring
and Evaluation Framework, of which the final policy document was released in 2007.
 5

Although M&E is commonly described as a unitary activity taking place during and after
the project life-cycle, the United Nations Environment Programme (UNEP) Project
Manual, Formulation, Approval, Monitoring and Evaluation (2005:50), defines monitoring
and evaluation separately, with monitoring being the "continuous process of assessing the
status of project implementation in relation to the approved work plan and budget… to
improve performance and achieve results [with] the overall purpose to ensure effectively
managed results and outputs through [the] measurement and assessment of performance."
Evaluation, according to the UNEP Project Manual, Formulation, Approval, Monitoring
and Evaluation (2005:55), is defined as "to determine as systematically and objectively as
possible the relevance, efficiency, effectiveness and impact of the organisations' activities
in relation to their objectives."

The success of the monitoring and evaluation effort will therefore depend on the design of
the programme or project, with specific reference to the realistic achievement of results
based on inputs, process, outputs and ultimately outcomes.

3. THE DEVELOPMENT OF PERFORMANCE BUDGETING AS A

STRATEGIC MANAGEMENT TOOL

The use of performance budgeting within the modern government structure is not a new
development. According to Lu (1998:1) performance budgeting had been tried once and
failed as public budgeting processes have gone through several phases of reform, with the
first being performance budgeting, followed by programme budgeting, management by
objective, zero-based budgeting, finally reverting back to performance budgeting.

Performance budgeting, under the original designation of programme budgeting, was

pioneered in the United States of America (USA) during the 1950s and applied widely in
the Organisation for Economic Cooperation and Development (OECD) countries in the
1960s and 1970s. Although various members of the academia and business environment
experience performance budgeting as a catalyst for effective service delivery in a positive
light, some such as Tandberg (2009:1) perceives this type of budgeting as equal to “Soviet-
style Central Planning’. Criticism in this regard reflected on the specific type of budgeting
efforts that led to mechanistic budget planning systems that were overly complex and
overloaded with useless data. Similar Soviet five-year plans were a major inspiration for
this type of planning model, with economists, engineers and social scientists providing the
 6

necessary input to define socially optimal development paths. To ensure that government
services contributed to the optimal development path, programmes and outputs had to be
defined where “shadow” prices had to be computed and linked to these outputs. The
enormity of calculating, analysing and re-adjusting the budget led to the demise of typical
performance budgeting, specifically due to the broader civil service management being
hampered by a number of unnecessary rigidities in deploying resources, managing
personnel and tracking indicators and results that was not well developed.

Between the 1950s and 1980s, limited progress was made in terms of performance
budgeting. According to Mascarenhas (cited in Lu, 1998:152), public discontent with
government and the belief in the superiority of private sector management have led to the
re-establishment of performance-linked budgeting efforts. This led to the introduction of
new approaches to performance budgeting that addressed the original shortfalls during the
1980s. Lu (1998:152) states that the most important similarity between the old and new
forms of performance budgeting remains their attempt to allocate resources based upon
some performance measures, of which five can be identified: resources required to sustain
a programme (input indicator), products that the programme generate (output indicator),
efficiency within the process (input and output indicators linked), the extent to which a
programme has achieved its goals and met performance targets (outcome indicator) and the
goal attainment only applicable to the programme itself (effectiveness indicator).

Lu (1998:161) further argues that successful performance budgeting should be based on

two conditions: the availability of outcome and effectiveness measures and the use of
outcome and effectiveness measures by participants in the budgetary process. This remains
opposed to the previous usage of performance budgeting where output indicators were
used to justify budgeting. Compared with outcome and effectiveness measures, indicators
of input and output are relatively easy to quantify, collect and comprehend since they
usually do not require sophisticated cost accounting systems and exorbitant resources to
collect data. However, the intended effect of a programme outcome, such as a healthy
community, based on the output of access to health services, can not be determined,
effectively rendering money spend on such programmes fruitless expenditure.
 7

4. THE IMPORTANCE OF PERFORMANCE BUDGETING AND

MEASUREMENT WITHIN THE GOVERNMENT SYSTEM

Levin (2005:13) states that governance systems shape socio-economic growth and
development trajectories, while developmental projects reaffirm the centrality of the
democratic state in the resolution of socio-economic problems. Building an effective
developmental state, therefore, is a central objective of the current government, since it is
pro-poor, effectively addressing socio-economic needs through decisive and coherent
intervention. To successfully address the needs of all citizens within the entire socio-
economic- and political spectrum, a fundamental re-alignment within the budgetary
process is essential to ensure performance measurement within the monitoring and
evaluation environment to improve service delivery.

Since budgeting within the spheres of government is a prerequisite for the successful
implementation and execution of government initiatives aimed at rendering optimal
services to all sectors of society, the success of a budget will depend on its link with the
policy and planning strategy. According to Rodden, Eskeland & Litvack (cited in Dothan
& Thompson, 2009:1) national and local governments face a "hard budget constraint" –
they can neither force central banks to buy their bonds nor expect some other entity to
rescue them from fiscal distress. They are constrained to make financial decisions within
their means as provided for by that mandate given to them by the electorate. Within this
context, it is therefore important to discuss four basic issues: regulatory compliance,
performance budgeting, performance measurement and service delivery.

4.1 Regulatory compliance

Fourie (2005:679) states that public financial management in the South African context is
based on three important elements, i.e. transparency, accountability and the integration of
policies, where the Constitution remains central to the role of the legislature in the
oversight of the budgetary process. Section 215 of the Constitution prescribes that budgets
prepared by the three spheres of government must promote transparency, accountability
and effective financial management. To assist the respective role-players in the budget
process, the Public Finance Management Act, 1999 (Act 1 of 1999 as amended by Act 26
of 1999) (PFMA) was created. The PFMA, according to Fourie (2005:679) modernised the
system of financial management in the public sector by moving away from the rule-driven
 8

centralised system of expenditure control to the management of public financial resources

by the head of department in a responsible manner to deliver services equitably. This has
led to durable and credible fiscal reforms which have redirected spending to appropriate
programmes and projects, while making budgeting authorities on all levels of government
more accountable through multi-year budgeting.

The essential requirements for performance budgeting, according to Robinson & Last
(2009:3) are information about the objectives and results of government expenditure - as
derived from key performance indicators (KPIs) and programme evaluation – and a
detailed budget preparation process designed to facilitate the use of acquired information
that will impact on budget funding decisions. Furthermore, a programme classification of
expenditure in the budget is also recommended in which expenditure are classified into
groups of similar services with similar objectives which has the potential to improve
expenditure prioritisation, while encouraging line ministries to spend more efficiently and
effectively. Lastly, two additional benefits of performance budgeting are that fiscal
discipline can be improved and that the Medium-Term Expenditure Framework (MTEF) –
the medium-term budgeting process introduced by the South African Government in 1997
to regulate and strengthen the planning process for longer periods to ensure continuous
service delivery - can naturally incorporate this type of budgeting.

According to Fourie (2005:680), shortcomings of the previous budgeting system led to the
development of the MTEF as depicted in the Department of Finance's Draft MTEF
Handbook (cited by Fourie, 2005:60), where the major shortcomings included an
incremental preparation of the budget which did not involve reviewing; an inadequate
reflection of activities in some votes; the lack of forward planning with no connection
between planning and budgeting; and a separation between budget preparation and
monitoring. The introduction of the MTEF as principle planning tool was based on the
premise that managers will have longer planning periods which will enable them to
manage their allocated financial resources more effectively. The Department of Finance's
Draft MTEF Handbook (cited by Fourie, 2005:60), further indicate that the introduction of
the MTEF will significantly improve the budget process though a restructuring of
expenditure guided by clearly developed policies; the identification of actual cost of
specific services; planning for restructuring expenditures; and introducing a rational
approach to resource allocation on all levels.
 9

4.2 Performance budgeting as integral part of the government's administrative

process

The use of performance data remains imperative during the budget process. Robinson and
Brumby (cited in Nkoana, 2007:3) states that the promotion of efficiency and effectiveness
in the utilisation of public resources remains the primary goal of performance budgeting.
This principle is specifically depicted in Section 195(1)(b) of the Constitution that the
efficient, economic and effective use of resources must be promoted. This applies to
administration throughout the three spheres of government, state institutions supporting
constitutional democracy and public enterprises. Performance budgeting must therefore
ensure the promotion of this principle.

This type of budgeting should also not be seen as an isolated initiative, but rather as part of
the broader system in which reforms are aimed to achieve results. These broader reforms
include public service reforms (internal processes) designed to increase the effectiveness
and efficiency of public sector employees, organisational restructuring (the system) to
increase the focus of service delivery while simultaneously improving coordination and
institutional oversight (monitoring and evaluation) as a result of the achievement or non-
achievement of objectives as depicted by the desired outcomes. Within this context the
most basic form of this type of budgeting remains the consideration of the specific
outcomes (results) that need to be achieved.

According to Diamond (2003:9) a key feature of the performance budgeting approach is

the recognition that, if performance is to matter, their must be an overall integration of
budget objectives within the entire management system to ensure the reward of good
budgetary performance, while poor budgetary performance is penalised. However,
performance budgeting remains more comprehensive than the simple refinement of budget
programmes. Diamond (2003:9) states that while using a programme structure to introduce
a performance orientation, the effectiveness thereof depends on a programme budget
format that must be integrated into a wider model of budget management. This is essential
for departments to maintain momentum and purpose to continuously develop and improve
services to be delivered more effectively. The most effective way to achieve this is to
fundamentally revise accountability relationships within the public sector, ultimately
affecting budget management profoundly where performance will be specified and
reported in clear and unambiguous language; government agencies will be given greater
 10

managerial autonomy and freedom from stringent input controls to determine the most
efficient delivery of results; and where incentives and sanctions can play a greater
regulatory role within the process.

Within the South African context, planning and budgeting remains the obligation of all
three spheres of government and it is within this realm that these spheres interact in an
integrated and coordinated manner as stipulated by Section 40(1) of the Constitution. The
challenge is to get the three spheres to work together, within the same planning framework
- budgeting and scheduling the same priorities - without competing for the same resources,
space and role. Successful service delivery, therefore, requires the unification of
government spheres to plan and deliver as a unit. The principle approach in this regard is
derived from Section 41(1) of the Constitution and the existence of intergovernmental
structures such as the Extended Cabinet meetings (makgotla), involving all Premiers and
provincial directors-general as well as the political and management leadership of the
South African Local Government Association (SALGA). In this forum strategic planning,
the MTEF and the government's Programme of Action (PoA) is discussed.

The generally accepted reasons for the establishment of a common planning and budgetary
interface are numerous, with the ultimate aim to render better services through the efficient
use of resources. Although efficiency and effectiveness are fundamental in the
performance budgeting process, Mc Gill (2001:380) includes four additional principles of
importance. These include a reliance on a strategic framework and inherent mechanisms of
resource allocation in relation to performance; the strategic context of performance
budgeting that is satisfied though public annual reporting based on outcomes; the
assumption that future budgets will be influenced by performance-informed decisions; and
the need for inputs, outputs, efficiency tests and impact assessments to exist.

However, many governments in the developing world are confronted with significant
challenges to improve planning, budgeting and the eventual link between the two process
areas. Some of the challenges arise from the need to establish clear policies, ensure that
budgets reflect those policies and that spending remains in line with allocations. The lack
of proper M&E strategies further affects these initiatives. According to The Presidency's
Green Paper on National Strategic Planning (2009:1) the lack of a coherent long-term
plan has weakened the government's ability to provide clear and consistent policies that
require the efficient mobilisation of society in pursuit of developmental objectives.
 11

Within this context, the government aims to focus its national planning strategy on both
planning and coordination efforts through the establishment of the National Planning
Commission in the Presidency. Key outputs from this Commission would include the
development of a long-term vision and plan incorporating the entire socio-economic-
political- and environmental spheres of society. The Presidency's Green Paper on National
Strategic Planning (2009:4) further states that The Presidency, led by the Minister in The
Presidency for National Planning, will produce a Medium Term Strategic Framework
(MTSF) every five years. It is envisaged that the MTSF will be more focussed than
planning strategies of the past since it needs to include high-level outcomes and targets for
priority functions. These outcomes and targets will be essential to the performance
management component of The Presidency's mandate. An annual programme of action is
also envisaged to result from the MTSF.

This will impact significantly on performance budgeting in South Africa where it is

already widely used as a strategic planning tool, with a specific emphasis on outcome
deliverables. Each department, sphere of government and state agency should have a
planning capacity of which the outcomes of their planning would feed into the
development of the national strategic plan, which in turn, define high level outcomes and
impacts. (The Presidency's Green Paper on National Strategic Planning, 2009:11). The
need for a performance budgeting tool can therefore not be negated, specifically in view of
the requirement to change the socio-economic structure towards one that is more inclusive
and labour intensive, more equitable, more productive, more diverse and appropriately
integrated into the world economy. (The Presidency's Green Paper on National Strategic
Planning, 2009:8).

4.3 Performance measurement in the public sector

A crucial element of a performance management system is performance measurement.

Since these two terms are often used interchangeably, Lebas (cited in Fryer, Antony &
Ogden, 2009:480) states that they are different entities, where performance measurement
focuses on the past, while performance management extrapolates data to provide
information about the future. Randor & Barnes (cited in Fryer et al., 2009:480)
differentiate them as “performance measurement is quantifying, either quantitatively or
qualitatively, the input, output or level of activity of an event or process. Performance
 12

management is action, based on performance measures and reporting, which results in

improvements in behaviour, motivation and processes and promotes innovation”.

According to Callahan & Kloby (2009:5) managing and measuring for results presents
considerable challenges for public managers. Outputs, such as school enrolment or the
availability of health institutions can easily be measured. However, it remains far more
difficult to measure outcomes or results such as the impact of school enrolment on the
economy of the country. Callahan & Kloby (2009:5) further states that one of the problems
associated with managing for results and measuring outcomes is determining the features
of desired outcomes or results. Existing performance measurement initiatives are generally
designed to systematically assess how much and how well government delivers (input and
output-based). It is within this context that, according to The Presidency's Green Paper on
National Strategic Planning (2009:29), the newly established systems in the Presidency,
i.e. the National Planning Commission (NPC) and the Performance Monitoring and
Evaluation Commission (PMEC) are linked in two fundamental ways: the involvement of
the monitoring and evaluation function in finalising planning instruments such as the
MTSF and Programme of Action developed by the NPC and the establishment of a
feedback loop between monitoring and evaluation and planning. The PMEC will therefore
assess progress, identify constraints, weaknesses and failures in implementation.

The achievement of outcomes such as the creation of work opportunities, economic

development and a healthy society will require dedicated actions from all relevant public
sector institutions. According to the Presidency’s Policy Document Improving Government
Performance: Our Approach (2009:13), all departments across the three spheres of
government, public entities, non-governmental organisations (NGOs), amongst others, will
be involved since none can achieve the envisaged outcomes alone. This outcome-based
orientation aims to provide a framework for an integrated government approach where
plans, activities, budgets and implementation strategies are coordinated.

The United Nations Development Programme (UNDP) Handbook on Monitoring and

Evaluating for Results (cited in the UNEP Project Manual: Formulation, Approval,
Monitoring and Evaluation, 2005:50) sets out six prerequisites for effective monitoring.
These include a focus on results and follow-ups; regular communication; regular analysis
of reports; the use of participatory monitoring mechanisms to ensure commitment,
ownership, follow-up and feedback on performance; ways to objectively assess progress
 13

and performance based on clear unambiguous criteria and indicators; and an active
generation of feedback reports based on lessons learned through the adoption of specific
strategies. Evaluation not only provides information to develop recommendations to
establish a basis for accountability, but also on when and how a project will be evaluated
based on three criteria, i.e. which include the type of evaluation which is suitable for the
project; the timescale of the entire evaluation effort either during or after the project; and
the total budget of the project.

4.4 Service delivery and performance measurement in Local government

Various solutions have already been provided by different authors concerning the
transformation and improvement of service delivery in South Africa. Venter & Theunissen
in Venter & Landsberg (2007:81) are of the opinion that most citizens do no immediately
comprehend the functions of the different spheres, nor government interventions as they
take them for granted, although government influence is always present. Local government
is probably the most active sphere of government pertaining to service delivery as it is the
level of government closest to citizens. Municipalities are, in theory, best able to
comprehend the needs and aspirations of citizens within their sphere of influence. They are
also be best suited to identify and address potential and mobilise resources. However, as
De Visser (2009:11) states, these characteristics do not automatically lend a municipality
to justify decisions or policy initiatives. Rather, a certain degree of legitimacy is given to
developmental initiatives when these initiatives are aligned with overall socio-economic
development within the municipality's area of influence and if local communities' wishes
are addressed through broader government structures and partnerships.

Development-oriented projects require funding and the success or failure thereof will
affect future allocations. In this case, project sustainability remains imperative, since
information about the sustainability of a project has direct financial and management
implications. Therefore, Sing (2003:872) states that the development of a detailed business
plan should not only reflect the essentials required for the project, such as responsibility,
structures, financing and roles and functions, but also the envisaged outcomes that must be
measurable to obtain additional funding, amongst others, should it be required.

Richards (2006:46) states that the planning and budgeting undertaken by municipalities
must be aligned with and complement the development plans and strategies of other
 14

affected municipalities and organs of state to give effect to the principles of cooperative
government as stated in Section 41 of the Constitution. Coordination of these
developmental programmes, either provincial or national, is therefore of the utmost
importance to ensure successful service delivery on local level. In this sense, local
government forms part of the developmental initiative. In working with communities, they
are finding sustainable ways to meet the socio-economic and infrastructure needs of all
residents to improve the quality of their lives. Integrated Development Plans (IDPs) are of
extreme significance to ensure a structured approach towards service delivery. In
developing these IDPs, both municipalities and communities can work together to find the
best solutions to achieve long-term development.

Budget allocations should therefore reflect specific policy priorities such as the link
between objectives and resources, the role of the MTEF as the strategic budgeting
framework, implementation schedules, the intergovernmental relations framework and a
general aptitude to apply “good practice” measurements.

5. THE USE OF MONITORING AND EVALUATION TO IMPROVE PUBLIC

SECTOR PERFORMANCE

Development in South Africa should reflect a desire to stabilise the macro-economic

situation, while addressing the needs of the poor through the reinvention of governance
systems without negating the Constitution. Government has the responsibility to ensure
that citizens have the fundamental rights as provided for in the Constitution, but financial
resources at its disposal are limited, resulting in a negative impact in the delivery of serves
through the spheres of government.

The use of the budget as a performance measurement tool within the M&E environment is
therefore essential, specifically in view of the current economic slowdown in which the
government intends to sustain an expansion of public spending by means of specified
targets that contribute to long-term economic growth, development and human capital.
According to Zall-Kusak & Rist (2001:1), there has been a global movement within
governments to reform and reshape the ways in which they function. These reforms have
generally been triggered by citizen demands for governments to be accountable,
transparent and provide more effective and efficient services. South Africa is no exception.
The restructuring of the public administration system since 1994 have brought about
 15

considerable advances in service delivery, with basic service delivery being extended to
previously marginalised communities. However, the set of medium-term objectives of the
Government as specified in the MTEF need to be aligned with existing long-term
objectives set out in White Papers, strategy documents, policy frameworks and additional
planning instruments. In this context, performance management, coordination, joint
planning and M&E need to be facilitated by, amongst other Acts, the Development
Facilitation Act, 1995 (Act 67 of 1995) and the Intergovernmental Relations Framework
Act, 2005 (Act 13 of 2005).

Furthermore, Van Zyl (2003:7) states that the MTEF process and budget process are
integrally related in South Africa since all draft budgets and bids for additional funding are
required to include estimations and projections of potential medium-term impacts. This is
emphasised by the National Treasury Guidelines for the Preparation of Expenditure
Estimates for the 2010 MTEF (2009:3), which states that entities and constitutional
institutions should consider all their funding priorities when compiling expenditure
estimates for the 2010 MTEF and that the various departments should prioritise service
delivery issues within the context of the current global economic crisis. The main objective
remains the achievability of these developmental priorities and the central catalyst towards
achieving them remains the budget.

6. CONCLUSION

Performance budgeting remains one of the most effective types of budgeting within the
M&E environment provided that it is implemented according to well-developed strategies
that focuses on the analysis of outcomes instead of broad outputs as determined by the
national strategic framework. Since performance budgeting is essentially a strategic effort
centralised within the national sphere of government, this budgeting strategy need not
impede on the operational spheres of government as their inputs and contributions through
the dedicated intergovernmental relations mechanisms remains imperative for the
successful execution of developmental policies such as housing and health care. Used
effectively, performance budgeting could enable government structures to effectively and
accurately budget over time and benchmark outcomes with Apex priorities between the
different spheres of government. A strong strategic framework is therefore necessary to
enable the successful implementation of performance budgeting. The strategic context of
performance budgeting should also be strengthened through regular feedback reports based
 16

on measured outcomes. The real test of performance budgeting, however, comes to afore
when resources are allocated against future strategies based on the MTEF, while being
measured against current allocations.

For performance budgeting to succeed, dedicated, professional and objective interventions

based on knowledge of the specific projects or programmes are essential. However, since
performance budgeting is based on outcome-indicators, these indicators need to be clearly
and unambiguously specified beforehand, while money needs to available for these
intervention projects. Furthermore, all priorities of government need to scheduled in
sequence to force decision makers to take action when difficulties arise. This is important
since decisions required during that specific stage of the project or programme need to be
taken immediately to ensure the continuous flow and implementation of subsequent stages
of the project.
 17

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