The PFMA's role in stifling South Africa's development outcomes

The delivery of the 2026 SONA and the upcoming Annual Budget Speech by the President and Minister of Finance, respectively, will have policy analysts, technocrats and political parties reflect on the (in)ability of the government of national unity (GNU) to create a balance between promoting economic growth, fiscal sustainability, ensuring policy certainty affecting key economic sectors and addressing social ills faced by our communities.

A major concern is the grassroots frustration over the government’s ongoing failure to fulfil its commitments, extending beyond the 2026 SONA to previous years. The real failure, however, lies in the institutions that are meant to deliver on them. On paper, the GNU and the state are clear about the key government priorities and development outcomes. These are expressed and measured through various planning and budgeting instruments such as the Medium-Term Development Plan (MTDP), the Medium-Term Expenditure Framework (MTEF), various service delivery models, delivery agreements, and departmental Strategic and Annual Performance Plans.

The state uses these instruments to ensure integration between government policy and implementation. However, these instruments promote alignment that does not translate into scalable development impact. However, one of the major contributing factors to ongoing government failure to implement SONA priorities and national outcomes is not a lack of political will, shortage of planning tools or lack of capable public servants. It is the structural design and accountability logic of the Public Finance Management Act of1999 (PFMA), the main public finance management instrument used to enable government departments to deliver on government’s sustainable and development agenda.

The PFMA was designed as a control tool for individual departments to address the institutional challenges faced by the state post-1994. Its objective is to strengthen the internal control environment and compliance within individual departments; reduce arbitrary spending; promote sound management of revenue, expenditure, assets and liabilities; and hold the Accounting Officer accountable for misuse of public funds and corruption in the department for which they are responsible.

It is rigid and not designed as a public financial management instrument to enable departments to deliver on cross-cutting priorities and development outcomes. The rational response by departments and Accounting Officers to the PFMA is prioritising compliance and survival over meaningful collaboration and co-ordinated success. Departments become risk-averse. Accounting Officers protect their budget votes. Innovation gets stifled. Government priorities remain under-achieved. Outcome indicators embedded in various planning documents such as MTDP, MTEF, Strategic and Annual Performance Plans of government departments remain symbolic. Scaling and measuring impact becomes a difficult task across board.

While the PFMA is indispensable and has relatively achieved its purpose as a control tool within individual departments, it is the major hindrance to the very same departments when delivering on government priorities and development outcomes. Government priorities and development outcomes are cross-cutting; require collaboration, shared risks, pooled resources, innovation and adaptive implementation by departments. No individual department can deliver on them. Yet, departments are expected to comply with the PFMA for compliance while expected to deliver on SONA priorities and development outcomes.

I argue that there is a legally binding missing layer in the PFMA that links development priorities, budget allocations, departmental allocations and outcomes, while allowing the PFMA to remain a control tool.

Until this gap is acknowledged and addressed, the country will continue to project relatively strong financial controls with weak developmental traction and declining government credibility. In short, this is not a call to abolish the PFMA. However, the structural design and accountability logic of the PFMA should not make the PFMA an end itself. The development challenges of 1999 are not the same as the development challenges of 2026. This is also not a call to diminish the role of Parliament in appropriating public funds or to discourage the role of the Auditor-General (SA).

This is a call to review the PFMA:

• To make delivery and accountability on development outcomes legally viable and unavoidable.
• Since outcomes are planned collectively but accounted for individually, enable Parliament to appropriate funds for a purpose/outcomes/cross-cutting initiative across departments or agencies instead of individual departmental votes.
• Assign joint accountability and manage shared risks.
• Enable departments to access funding based on delivery of outcomes not budget programmes.

South Africa does not have a planning or outcomes problem. It has a public finance system that promotes alignment of outcomes indicators to various planning and reporting frameworks, appropriate funds to individual departments for individual departmental accountability and hope that outcomes will emerge and government priorities become a reality.

*Lindelwa Nonjaduka is a graduate of the MPhil in Development Finance at StellenboschBusiness School and Founding Director of The Equilibrium Institute.

**The views expressed do not necessarily reflect the views of IOL, Independent Media or the Independent on Saturday.