R1.2bn and 12 years later, no IFMS in place

Read time 4min 10sec
Finance minister Malusi Gigaba. (Photo source: GCIS)
Finance minister Malusi Gigaba. (Photo source: GCIS)

National Treasury's failed attempt to implement its integrated financial management system (IFMS) is not the only instance where government has poured billions into a technology project with nothing to show for it.

This was the sentiment shared by the Black IT Forum's (BITF's) Morena Ntsika, who believes the development and implementation of government's IFMS project has been wasteful expenditure.

Government has over the years been criticised for wasteful expenditure and poor implementation of IT systems. For example, the City of Johannesburg has for many years been dealing with a billing crisis, which is the result of a failed move to put all different departments on one SAP platform.

Yesterday, finance minister Malusi Gigaba and National Treasury executives appeared before the Standing Committee on Public Accounts (Scopa) in Parliament to account for failing to ensure the successful implementation of the pilot phase of the IFMS project, which has resulted in losses amounting to more than a billion rand.

Treasury officials told Scopa that the first phase of IFMS was not working and had institutional challenges and delays, and that is why the department moved to phase two. Treasury noted it has not taken any disciplinary measures as yet on the IFMS transgression, but once internal investigations are final, decisive action will be taken.

According to Ntsika, the tender for the initial IFMS project is not the only government contract that has failed to bring about results.

There are a lot of tenders that need to be questioned, he comments. When multinational companies approach government for business they talk about radical transformation, and always say they will support small, medium and micro enterprises (SMMEs) if they are awarded a specific tender, he explains.

Practically looking at the situation, none of that is happening. The same thing happened with the IFMS project, he says. "From 2005 up to now they [Treasury] have spent about R1.2 billion and there is nothing to show for it. They have paid R1.2 billion but there is no system in place."

Legacy issues

Approved by Cabinet in 2005, the IFMS project was launched in the hopes it will resolve financial system problems and replace aging and fragmented financial, supply chain, payroll and human resource management systems.

A public sector joint-initiative - led by Treasury in partnership with the Department of Public Service and Administration and the State IT Agency (SITA) - the project aims to deliver an integrated financial management system to be used throughout national and provincial government.

The project has been described as being critical to tightening financial control, eradicating corruption and improving public sector efficacy. It will encompass core operational functionality, including supply chain management, financial management, HR management, payroll, inventory and business intelligence.

However, 12 years later and over R1 billion down the drain, the project has shown no noticeable outcomes.

The BITF's Ntsika is of the view that SITA failed Treasury by not being an efficient project manager in the implementation of the IFMS project.

According to him, SITA's role was to project manage and ensure the system is implemented according to what the supplier had proposed, but the agency lost sight of the project.

It never managed anything, he states. "SITA acted irresponsibly, it has always been reckless. SITA has always been the organisation that favours multinationals without fear or favour. They always undermine the capacity and credibility of local SMMEs in terms of implementing the very same systems.

"...Nobody challenges SITA in its decisions, which is why they failed Treasury. Whether we like it or not, there will be nothing to show from this tender."

Looking ahead

Gigaba told Scopa that IFMS remains an important project that needs to be done.

He stated that what has happened with IFMS must not erode the trust the nation has in Treasury as an institution because this was one lapse. The minister noted his department will as soon as possible find a person to head the IFMS project.

Ntsika points out that Treasury needs to take those that failed to implement IFMS to task and ensure they pay back all the money that was lost.

The tender can be reissued but when that happens, "the tender needs to be broken down according to the deliverables and say how much each will cost. The deliverables must be realistic," he concludes.

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