A Presentation to the Select Committee on Appropriations Presented by Mr Themba Fosi DCoG DDG 23 MAY 2018 Committee Room v475 Old Assembly Parliament PRESENTATION 2 Context Back to Basics pillars ID: 806046
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Slide1
Workshop on Progress with B2B Programme and Support provided to Municipalities
A Presentation to the Select Committee on Appropriations
Presented by:
Mr. Themba Fosi,
DCoG
DDG
23 MAY 2018
Committee Room v475, Old Assembly, Parliament
Slide2PRESENTATION
2
Context
Back to Basics pillars
Levels of municipal performance
Measurements methodology
MIG Performance
What needs to be done
Approach to addressing Distressed Municipalities
Recommendations
Slide3MANDATES
3
Section 153 of the Constitution
:
Developmental duties of municipalities: A municipality must –
“Structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community
;
Section
154 of the Constitution:
“
The national government and provincial government, by legislative and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions
.”
Section 139(1) of the Constitution
“Provides
that when a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation, the relevant provincial executive may intervene by taking any appropriate steps to ensure fulfilment of that
obligation”.
Slide4WHAT DOES “GETTING THE BASICS RIGHT” MEAN?
1
Putting people first:
let
’
s listen and communicate
Consistent Provision of Services to the right quality and right standard
Good governance and transparent administration
Robust institutions with skilled and capable staff
Sound financial management & accounting
1
2
3
4
5
4
Slide5ACCEPTABLE LEVEL OF PERFORMANCE
Strong political and administrative leadership;
Characterised by political stability;
Councils meeting regularly as legislated;
Functional council and oversight structures;
Regular report back to communities;
Low vacancy rates;
Collection rates above 80% on average;
Spending on capital budgets above 80%;
Continuity in the administration;
Consistent spending of capital budgets;Consistent unqualified audit outcomes;Responsive to service delivery needs; Evidence of good administrative and financial management; andPerformance driven by Integrated Development Plans, Budgets Compliance and Innovation 5
Slide6UNACCEPTABLE LEVEL OF PERFORMANCE
Challenges of political-administrative interface;
High political in-fighting and instability;
Unstable coalitions and impact on administration;
Non-compliance with rules and regulations;
High vacancy rates;
High levels of incompetency among staff;
Extremely low levels of capital budget spending;
Inappropriate spending of budgets and high debt;
Overall disregard for financial and supply chain management regulations;
Compromised service delivery;High level of community dissatisfaction resulting in protests;
6
Slide7UNDER PERFORMING MUNICIPALITIES
7
Various measurement tools are utilized to determine unacceptable level of performance:
National Treasury
Auditor – General
Infrastructure Spending, etc.
Other critical indicators that demonstrate poor level of performance:
Political & Administrative instability;
Vacancies at senior management level;
Non functional Council structures
Breakdown in the delivery of servicesCommunity protests and dissatisfaction
Slide88
Slide99
Expenditure performance of MIG since inception in 2004
Financial Year
Transferred
Expenditure
% spent
Unspent funds
2004/05
4,439,942
4,368,489
98.4%
71,453
2005/06
5,436,161
5,251,226
96.6%
184,935
2006/07
5,761,834
5,753,988
99.9%
7,846
2007/08
8,261,788
7,639,330
92.5%
622,458
2008/09
8,884,714
8,036,899
90.5%
847,815
2009/10
8,735,186
7,471,799
85.5%
1,263,387
2010/11
9,924,806
8,539,296
86.0%
1,385,510
2011/12
11,443,490
9,248,418
80.8%
2,195,072
2012/13
13,884,178
10,969,888
79.0%
2,914,290
2013/14
14,224,447
12,880,499
90.6%
1,343,948
2014/15
14,745,475
13,067,319
88.6%
1,678,156
2015/16
14,887,917
13,744,274
92.3%
1,143,643
2016/17
14,914,028
13,784,509
92.4%
1,129,519
Total
135,543,966
120,755,934
89.1%
14,788,032
Slide1010
MIG Expenditure
P
erformance for the past 3 financial years (2014/15 – 2016/17)
Slide1111
MIG Distributions across Key Areas (Categories) 2014/15
– 2016/17
Slide1212
Non- financial performance
of MIG
2012/13 – 2016/17
Slide1313
MIG Expenditure as at
31 March 2018
DoRA report: March 2018
Slide14MIG Expenditure as at
30 April 2018
DoRA report: April 2018
Slide15Financial discipline measures
Withholding:
the
transferring officer evokes
S18
whereby scheduled
transfers are withheld (no longer than 120 days) and the payment schedule is amended to inform future transfers to the municipality
until performance
improves with regard to expenditure, reporting and commitment levels.
Withholding
:
National Treasury evokes S24 - scheduled transfers are withheld and the payment schedule is continuously amended to inform transfers for work completed. Stopping and Reallocation: Optimizing
MIG funding by reallocating stopped funds to performing municipalities as an incentive and by doing so prevent unnecessary unspent funds by the end of the municipal financial year and roll-overs. Stopping and Reallocation: Reallocate the funding stopped from poorly performing local municipalities to their district municipalities and by doing so fulfill its Constitutional mandate to support Local Municipalities. A SLA signed between the LM and DM.
Slide16Financial
discipline measures
A: Withholding (Ref. Section 18)
The total
R15,9
billion MIG allocation was transferred to municipalities during the 2017/2018
transfers
between July 2017 and March 2018,
Department
evoked
section 18
of the
DoRA to municipalities that did not meet expenditure requirements and / or not comply with the provisions of the Act. MIG amounting to R1.5 billion was withheld for a period not exceeding 30 days;
R805 million was withheld for more than 30 days; and R311 million was withheld for up to 120 days which was subsequently affected by stopping.
Slide17DoRA report: March 2018
Financial discipline measures
B: Withholding (Ref. Section 24)
Slide18Further
stopping and reallocation procedures
implemented in
March 2018 that effected 53 municipalities to the value of R589 million that was reallocated to 49
municipalities
As
at the end of
March 2018, MIG
funding
stopped to
56 municipalities totaling R669 million which has been reallocated to 53 municipalities
Lowest stopping since process started in 2013/14 - 2013/14 – R678m stopped, 2014/15 –
R957m stopped, 2015/16 – R829m, stopped, 2016/17 – R940m stopped Province
Total Grant AllocationR’000Funds StoppedR’000Funds Re-allocatedR’000
Total MIG transferredR’000Eastern Cape3 109 79670 500
82 500
3 121 796Free State771 95448 08640 200764 068 Gauteng543 420
32 54215 700
526 578
Kwazulu
Natal
3 444 092
41 682
61 500
3 463 910
Limpopo
3 342 883
92 959
102 592
3 352 516
Mpumalanga
1 852 385
37 324
40 000
1 855 061
Northern Cape
480 527
43 507
51 000
488 020
North West
1 814 487
206 701
174 542
1 782 328
Western Cape
531 708
25 352
30 619
536 975
TOTAL
15 891 252
598 653
598 653
15 891 252
Financial discipline measures
C:
Stopping and Reallocation
Slide19DoRA report: March 2018
Financial discipline measures
D:
Stopping and Reallocation
Slide2020
With the publication of the Division of Revenue Bill in February 2018, municipalities were able to make timeous adjustments to their MIG implementation plans for 2018/19
Reduction of MIG over 2018 MTEF
Slide21STATUS ON THE APPOINTMENT OF SENIOR MANAGERS IN MUNICIPALITIES
Number of filled and vacant
posts
Province
Municipal Manager
Chief Financial Officer
Technical
Service
Corporate
Services
Development Planning
Community Services
Filled
Vacant
Filled
Vacant
Filled
Vacant
Filled
Vacant
Filled
Vacant
Filled
Vacant
EC
32
7
31
8
35
4
33
6
41
8
35
4
GP
10
1
7
4
10
1
9
2
9
3
10
1
FS
20
3
15
8
8
12
14
9
8
3
10
10
KZN
41
13
45
9
40
13
40
10
17
9
39
8
LP
20
7
16
11
17
10
17
10
19
9
21
6
MP
10
10
17
3
11
9
12
8
11
2
13
6
NC
17
14
24
7
21
8
18
12
6
4
7
6
NW
16
6
12
10
13
9
13
9
9
2
13
9
WC
28
2
28
2
24
6
20
4
13
4
22
3
TOTAL
195
62
195
62
179
72
176
70
133
44
170
53
Slide22WE NEED TO DO THINGS DIFFERENTLY IF WE WANT DIFFERENT RESULTS.
22
Uneven performance continue to characterize the state of municipalities;
There are municipalities that continue to remain in a dire state, despite support and intervention measures, e.g.
(
Makana
,
Ngaka
Modiri
Molema, Thabazimbi, Ubuntu, Emalahleni, Emfuleni, Mamusa, Mafube and Masilonyana, Goven Mbeki, kannaland, etc)Predominant challenges relate to:,,,,,,,
unfunded budgetsaging roads, water and electricity infrastructurelow collection ratelack of internal controlsbloated organogramslack of performance management systems
Political and Administrative instabilityhigh debt owed to and by municipalitieshigh turnover of senior managers/poor operations and maintenance, etc.low revenue basepoor leadership and management
Slide23REMAINING CHALLENGES
SYSTEMIC AND STRUCTURAL BLOCKAGES:
Weak/non-
existant
revenue base resulting in financially unsustainable municipalities;
Reversing apartheid spatial patterns and managing rapid urbanisation;
Increasing debt owed to municipalities and by municipalities;
Unresolved distribution and location of powers and functions;
Weak
political and administrative
accountability, transparency and poor internal controls and consequence management;Poor budgeting for maintenance and provision of quality service;There is no intergovernmental convergence in terms of priorities and common agenda pursued resulting in incoherent impact at local level.Weak intergovernmental and long-term planning; Accelerate implementation of resolution impacting on the macro organisation of the state;23
Slide24REMAINING CHALLENGES
SYSTEMIC AND STRUCTURAL BLOCKAGES:
The recently released Poverty Trends in South Africa report, titled “An examination of absolute poverty between 2006 and 2015” indicates among other things that:
SA is experiencing an increasing rise in unemployment
More than 30-million South Africans are languishing in poverty
Three out of five black South Africans are languishing in poverty
Due to very low incomes amongst black South Africans, saving was almost impossible
Poor families spend a significant amount of their earnings on food
Review
of the vertical transfers amongst the three spheres has to be undertaken to determine whether the transfers adequately match the functions performed in each
sphere;Inadequacy of the LGES to respond to the cost of provision of basic services in different municipalities;Municipal own revenue are dependent on “ideal economic” situations, with a vibrant economy, less unemployment and therefore low numbers of indigent households to provide free basic services;C
apacity building for councillors to be able to exercise oversight more effectively and efficiently;24
Slide25APPROACH TO ADDRESSING POOR PERFORMING MUNICIPALITIES
25
Under – performance defined as “
Dysfunctional, Distressed, Vulnerable and Not doing well, others refer to municipalities in ICU”;
Need concrete and sustainable proposal to address poor performance:
(particularly
areas
within our
control
)
Leadership, Management, Accountability and Oversight;Adherence to rules and regulation governing the system;Consequence management, etc.;Identify critical areas that require support, capacity building;Financial management & revenue generation, planning, infrastructure delivery, critical skills, etc.; Monitoring and Interventions:Blatant disregard of laws;
Fraud and CorruptionPolitical and Administrative instability, etc.
Slide26WHAT NEEDS TO BE DONE
26
Developing solutions that are concrete, targeted and sustainable to address chronic areas of under performance;
Reviewing systems, processes, tools and instruments critical for creating an enabling environment for improved performance;
Build capacity and capability for management of a sustained programme of support and interventions;
Develop a structured approach to reviewing systemic and structural challenges impacting on the full realization of the Developmental Local Government System;
Strengthen Provincial Rapid Response capacity to address hotspots areas, implementation capacity weaknesses at municipal level and community dissatisfaction/protests
Slide27MINISTER’S PRIORITIES FOR ADDRESSSING DISTRESSED MUNICIPALITIES
27
Ministerial B2B Provincial Visit
Agree
on root causes and develop concrete B2B action plans that identifies extent of problem, level of support
required;
Develop
provincial specific targeted concrete
programme
for distressed
municipalities;National & Provincial Support Packages;Provinces to report regularly to MinMec and PCC on these support actions;Mobilisation of Sector Departments, SOE’s, Traditional Leaders, Business and other critical stakeholders; and MOU with National Treasury identified joint priority list of Distressed Municipalities and a joint Plan of Action.
Slide28COORDINATION & COOPERATION WITH NT - OBJECTIVES AND PRINCIPLES
28
To give
effect to the framework of cooperative governance as contemplated in Chapter 3 of the Constitution;
National
DCoG
would perform overall coordination role in the space of local government through the Back to Basics programme (B2B);
National Treasury, together with Provincial Treasuries, would take lead on all financial management related responsibilities as outlined in the MFMA and the supporting regulations and COGTA would, together with the provincial DCOG departments, take the lead on all governance and service delivery matters as outlined in the MSA and the Municipal Structures Act, 117 of 1998;
Both departments will ensure a structured and coordinated approach supporting prioritised financially distressed and dysfunctional municipalities;
R
ecord and outline the institutional and administrative arrangements within DCoG and NT for the development, monitoring, implementation, support and reporting of local government legislation in municipalities;
Slide29COORDINATION & COOPERATION WITH NT - OBJECTIVES AND PRINCIPLES
29
Implement
the necessary actions to cascade the implementation of this
MoU
to provincial structures
;
S
upport
the possible changes needed to institutions to give effect to this MOU, following transfer of powers and functions conferred by local government legislation or as a result of amendments to local government legislation;
Promote the collaboration of intervention activities, to prevent duplication and ensure optimal utilisation of resources;Improve intergovernmental relations through a coordinated value adding support and assistance to municipalities as primary focus;Promote and consider practical implementation of support and assistance to municipalities; andThe Technical Team consisting of senior management of both NT and DCOG be immediately established to manage the situation wherein the functions and legal mandates overlap and to also resolve disagreements that may from time to time arise between the two departments.
Slide30MONITORING AND INFORMATION MANAGEMENT
30
The parties agree to establish a Joint Technical Team to institute a monitoring and information system in respect of the powers and functions assigned to them in terms of local government legislation. The duties of the team will
include-
M
onitoring
the performance of municipalities on a regular basis
;
M
onitoring
municipalities' capacity and assess the support needed by municipalities to exercise their powers and perform their functions;Monitoring the implementation of the MoU between the two departments and advising provincial departments accordingly;
Slide31MONITORING AND INFORMATION MANAGEMENT
31
Identifying problems and introduce the necessary remedial steps to rectify gaps in either municipal governance or service delivery
;
Sharing information with each other as requested on a timely basis;
and
Meeting regularly or at least twice a year, to review progress reports.
The
Joint Technical Team will comprise of the respective Directors-General or their delegate, and Deputy-Directors General or their delegate, of both departments and the chairmanship for these meetings will rotate on a yearly
basis.
Slide32MISA SUPPORT TO MUNICIPALITIES: MANDATE
32
The Municipal Infrastructure Support Agent (MISA) is a government component of the Department of Cooperative Governance (
DCoG
).
It was established in May 2012 as a special purpose vehicle for municipal infrastructure management support.
MISA is mandated to:
Render infrastructure technical advice and support to municipalities, and
Strengthen technical capacity of municipalities to perform their functions and execute their powers.
MISA executes its mandate by supporting municipalities to plan, deliver, operate and maintain infrastructure.
Slide33MISA SUPPORT TO MUNICIPALITIES: APPROACH
33
Triggers for MISA support to a municipality:
A municipality underspending on infrastructure budget;
Poor service delivery;
Poor infrastructure management.
MISA support focuses on building technical capacity to plan, deliver, operate and maintain infrastructure.
A multi-dimensional capacity building approach:
Slide34MISA SUPPORT TO MUNICIPALITIES: POSSIBLE CAPACITY BUILDING PROCESSES
34
Programmes and processes for building municipal technical capacity:
Slide35MISA SUPPORT TO MUNICIPALITIES: CURRENT PROGRAMMES
35
Technical Support Services:
Technical Skills Programmes:
Apprenticeship Programme
Experiential Learnership
Young Graduate Programme
Artisan Recognition of Prior Learning (ARPL)
Technical Training for Municipal Officials
Artisan Placement Programme
Technical Bursary SchemeInfrastructure Assessment and Analysis:Infrastructure assets condition assessmentInfrastructure planning
Infrastructure delivery supportInfrastructure operations and maintenance supportInfrastructure Delivery Maintenance and Stakeholder Coordination:Technical supportLand Use Management SupportSector CollaborationStakeholder Relations
Slide36MISA SUPPORT TO MUNICIPALITIES: CURRENT PROGRAMMES
36
Infrastructure Delivery
M
anagement Support Services
(
B
eing established)
:
Project Management:
Planning, delivery, maintenance of infrastructureProcurement of infrastructure projectsManagement of infrastructure contractsStakeholder relations managementFramework Contracts and Infrastructure Procurement:National framework contracts managementMunicipal infrastructure procurementInfrastructure Financing:
Municipal Infrastructure Grant Policy ManagementMIG Implementation Monitoring and EvaluationMunicipal Infrastructure InvestmentMunicipal Infrastructure Funding and Delivery Technology
Slide37MISA SUPPORT TO MUNICIPALITIES: STRATEGIC SUPPORT PACKAGES
37
The following strategic support packages are implemented:
Establishment and deployment of District Technical Support Teams
Development of a Technical Skills Pipeline in Local Government
Regional Management Support Contracts (RMSCs)
Programme Management Office (PMO)
Alignment of Bulk with Reticulation
Slide38MISA SUPPORT TO MUNICIPALITIES: District Technical Support Teams
38
In the 2018/19 financial year, MISA is supporting 81 municipalities
55 of the 81 municipalities will be supported through the deployment of District Technical Support Teams (DTSTs). These municipalities struggle to spend their MIG allocations and have other service delivery challenges
Support by the DTSTs is aimed at building permanent technical capacity in the 55 municipalities
Twelve District Technical Support Teams have been established to support 39 municipalities from may 2018
An additional 6 teams will be established by October 2018 to support the remaining 16 municipalities
Municipal technical capacity will be built through Project Management Units (PMUs) in municipalities
The support will continue for a minimum of three financial years
Support focuses on governance and administration, financial management and service delivery
Slide39MISA SUPPORT TO MUNICIPALITIES: Development of a Skills Pipeline for Local Government
39
Amongst other skills development
programmes
, there is a deliberate effort to build a technical skills pipeline for local government through the Young Graduate Programme
150 Young Graduates will be deployed in municipalities and provided with mentorship in 2018/19. A total of 67 of the YGs are already in municipalities
The Programme is meant to address the shortage of engineering capacity in municipalities
A concept for development and deployment of more young graduates will being drafted
Slide40The Regional Management Support Contractors (RMSC) Programme is a change management programme aimed at achieving an institutional turnaround in a municipality.
A
ring-fenced budget of R80 million has been allocated for the programme over the MTEF period from 2017
.
Its
roll-out commenced in 2017 in three pilot municipalities, namely:
Amathole
, OR Tambo and Sekhukhune
.
The
initial focus is on improving systems and processes for delivering water and sanitation services.Each of the pilot districts is receiving support through a service provider comprising specialists in various disciplines such as Chartered Accountant; Procurement Specialist; Water Specialist; Change Management Specialist, Infrastructure Financing Specialist, Programme and Project Management Specialist, and Human Resource Specialist.
40
MISA SUPPORT TO MUNICIPALITIES: Regional Management Support Contractors (RMSC) Programme
Slide41The Programme Management Office (PMO) is an initiative of the Inter-Ministerial Task Team (IMTT) as an institutional arrangement for coordinating support for 27 Districts.
Targeted support towards the eradication of service backlogs is being provided to these 27 districts.
It is spearheaded by MISA but involves other key stakeholders such as DBSA, Sector Departments, etc.
Assessment of 10 Districts has been concluded through the PMO to date.
Based on the outcome of assessments, tailored support plans are being developed.
A total of 22 Districts will have been assessed by the end of 2018/19 financial year.
41
MISA SUPPORT TO MUNICIPALITIES:
Programme Management Office (PMO)
Slide42This programme is targeted at 18 Water Service Authorities (WSA) experiencing delays in the completion of water reticulation infrastructure.
Construction of bulk infrastructure to connect these municipalities have long been completed in certain cases.
This is a collaborative programme involving relevant stakeholders such as SALGA, DBSA, National Treasury, DWS, DOE and relevant provinces.
Seven (7) municipalities have been selected for the pilot phase of the programme.
The roll out of this programme will also entail revenue enhancement through the piloting of water connection for rural households in the yard instead of access through community standpipes.
42
MISA SUPPORT TO MUNICIPALITIES:
Alignment of Bulk with Reticulation Infrastructure
Slide4343
Thank you