Planning

• A Supply Chain Management Policy sets out an organ of state’s policy on each of the four stages of supply chain management - demand management, acquisition management, logistics management, and disposal management. 
• It is a document that each organ of state is required to have in terms of the PFMA and the MFMA, and you should be able to access the policy on request from the organ of state (or sometimes on their website).
  

5-year plans

Government is elected for a 5-year term. For this term, it develops 5-year plans, known as strategic plans or frameworks. In the current era, the overall 5-year plan of the government must reflect the objectives and plans of the National Development Plan, which set goals the government must reach by 2030.

5-year Strategic Plans are also produced by every government department at the start of a new term. Each financial year, running from 01 April – 31 March the following year, departments must also prepare an Annual Performance Plan.

Budgeting three years ahead

Budgets are organised in 3-year cycles, known as the medium-term. In October, the Minister of Finance presents the Medium-Term Budget Policy Statement, which sets out how the government plans to budget to meet priorities over the next three years. Then in February, the annual budget speech outlines the priorities and funding for the coming financial year.

The planning cycle each year

In each calendar year, planning and budgeting flow as follows:

• In February, the President outlines the priorities of government in the State of the Nation Address (SONA).  How these priorities will be funded is elaborated on by the Minister of Finance in the budget speech before the end of February.
• Organs of state must set out their annual plans in an Annual Performance Plan, published in March. These annual plans must also give effect to the 5-year strategic plan of the department, agreed at the start of the government’s term.
• The Annual Performance Plan provides a breakdown of the procuring entity’s objectives into quarterly targets.  
• For example, the President may say in his SONA “government will replace mud school structures in the Eastern Cape with proper infrastructure”. This must be reflected in the Strategic Document and Annual Performance Plan of the Eastern Cape Department of Education.

Municipalities’ planning cycle

Municipalities have a slightly different planning and budgeting process and a financial year that runs three months later than the national and provincial departments, from 01 July – 30 June.

Regulations

The Treasury Regulations read with Public Service Regulations require the public to be consulted in this planning and budgeting process. This requirement is based on section 195(1)(e) of the Constitution. People's needs must be responded to, and the public must be encouraged to participate in policy-making.

Procurement

The process of buying goods or services using public funds.

Organ of state

• Every organ of state must procure when it spends money
• Every organ of state must have a policy to guide its procurement practices, this is known as a supply chain management policy.
• Organs of State include national departments, provincial departments, municipalities, state-owned entities and other public entities, like water boards and other regulatory bodies.
• All national and provincial public entities are listed in the Public Finance Management Act (PFMA) 
• A list of municipal entities, established in terms of the Municipal Finance Management Act (MFMA) can be found here. City Power in Johannesburg is an example of a municipal entity. 
• The PFMA determines how national and provincial organs of state must spend public money and the MFMA determines how municipal organs of state must spend public money.

Accounting officer / Accounting Authorities

• The accounting officer in a public entity is the individual, or structure, who/which is ultimately responsible for the procurement process, as well as all other financial management of public entities. 
• Every government department (national or provincial) and constitutional institution will have an Accounting Officer. Every public entity will have an Accounting Authority. Accounting Officers and Accounting Authorities have similar responsibilities. 
• In a provincial department, the Accounting Officer is the HOD.
• In a national department, the Accounting Officer is the Director-General.
• In a public entity, the Accounting Authority is usually the Board. 
• In a municipality, the Accounting Officer is the municipal manager
• In a municipal entity, the Accounting Officer is the CEO of the municipal entity. 
• Accounting officers sign contracts between public entities and the suppliers / service providers. 
• Other officials may sign these agreements on behalf of the Accounting Officers, but only if there has been a lawful, formal delegation of the power to do so, by the Accounting Officer.

Constitutional Institution

These are institutions created directly by the Constitution, for example the South African Human Rights Commission, or the Public Protector.

PFMA

Public Finance Management Act 1 of 1999.

MFMA

Local Government: Municipal Finance Management Act 56 of 2003.

State-owned entity

This word has no real meaning in terms of the PFMA and MFMA. What is commonly referred to as state-owned entities like Eskom or Transnet are actually known as “public entities” in terms of relevant legislation.

Public entity

Public Entities are national or provincial bodies and are defined in the full PFMA in section 1. They are bodies which are fully or substantially funded through public funds and are accountable to either the national or provincial legislatures.