Treasury suspends funds for the Employment Creation Fund amid governance issues
The Treasury has suspended the release of funds earmarked for the Employment Creation Fund (ECF) because of concerns about its governance and compliance with financial and legal prescripts.
Business Day reported on Thursday that hundreds of millions of rand meant for beneficiaries of the fund had not been disbursed because of a dispute between the Treasury and the Department of Trade and Industry, which administers the fund, intended for business support.
The funds were derived from the €100m donated by the EU for employment creation support in 2009.
The Treasury said in response to questions that it had suspended the release of donor funds to the ECF and initiated a performance audit "after concerns were raised about the ECF’s governance and compliance with financial and legal prescripts regarding the use of Official Development Assistance (ODA).
"The audit identified a number of issues, mostly relating to compliance, accountability and good governance. Based on these findings, the National Treasury and the Department of Trade and Industry agreed that the findings and the recommendations of the audit must be addressed before the release of the funds to the [department]. The Treasury and [department] officials are currently working on addressing the audit findings and recommendations."
Trade and Industry Minister Rob Davies said in a reply to a parliamentary question by DA spokesperson on trade and industry Dean Macpherson earlier this year that the balance due to ECF projects was R508.8m. "There are 31 projects in progress and [they] will be completed once funds have been received from the National Treasury," Davies said.
Macpherson said this week that he had received a lot of complaints from companies that were not getting the funds they had been promised — they had made plans and investments on the basis of these promises.
In an extraordinary letter sent to ECF fund beneficiaries late last month, the department’s fund manager Paseka Masemula suggested that Treasury officials were holding back economic development and told fund beneficiaries that the ECF secretariat "is not confident that you are going to get your money any time soon, if ever".