Capacity building at municipalities: National Treasury, DBSA, Department Cooperative Governance & Traditional Affairs & SALGA briefings

Standing Committee on Appropriations

16 August 2010
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Committee met with representatives of National Treasury, the Development Bank of Southern Africa (DBSA), the South African Local Government Association (SALGA) and the Department of Cooperative Governance and Traditional Affairs (COGTA) to discuss capacitating local municipalities.

National Treasury noted that many training programmes were conducted through consultants, and there was a need to monitor the quality of the programmes more closely. The Municipal Finance Management Internship Programme encouraged municipalities to take in, and retain interns after the training period. A survey had shown that the delegations of financial management responsibilities in municipal budget offices was still very weak, with shortages of key skills, widespread use of consultants in the preparation of annual financial statements, and generally limited experience and lack of proper financial management qualifications. National Treasury offered a Financial Management Grant, which was conditional upon the appointment of a minimum of five interns and a qualified Chief Financial Officer, the establishment of Supply Chain Management and Internal Audit units, and ongoing review, revision and submission of Municipal Finance Management Act implementation plans to National Treasury, improvement in the financial and reporting systems, implementation of reforms and preparation of a financial recovery plan>

The DBSA had a Development Fund, which provided for expertise, grant funding, development facilitation and local economic development initiatives. It also had five major programmes. Siyenza Manje deployed experts to low-capacity municipalities, Vulindlela offered accredited training to municipalities and government departments and Agencies assisted donors and development partners to implement development initiatives, and there were also programmes for Rural Development and Community Development Facilitation. The statistics in regard to quality of audit reports, municipalities in financial distress and vacancy rates were given. There was a R122 million backlog for operations and maintenance. Challenges faced by municipalities included included insufficient funds to address infrastructure backlogs, lack of efficient financial management and billing systems, low revenue bases, non-compliance with supply-chain management and procurement processes, high vacancy rates and a lack of planning capacity. The Siyenza Manje programme deployed capable human resources to municipalities to build capacity and to unlock service delivery blockages.

SALGA said that it was necessary to address capacity constraints of the poor skills base, lack of career pathing, lack of skills development programmes, and under-investment in technical, management and leadership skills. There had been serious leadership and governance challenges and inadequate human resource capital. SALGA described its capacity building projects, and the P3 programme to facilitate interaction between local authorities and non-state roleplayers. Capacity building programmes were needed for politicians and officials, and career pathing and other incentives were needed for municipal staff, while the Siyenza Manje programme should be extended to more municipalities, and more creative responses to the skills shortage were required. Political interference and influence should be actively discouraged when appointing staff

The Department of Cooperative Governance and Traditional Affairs (COGTA) outlined the purpose of the Municipal Systems Improvement Grant, which aimed to build in-house capacity and stabilise institutional and governance systems, and the Municipal Infrastructure Grant, which would support capacity building through Project Management Units. Capacity building was hindered by fragmentation of initiatives, limited progress on key indicators, and a lack of critical skills. The Department’s Local Government Turnaround Strategy was primarily aimed at restoring the confidence of people in municipalities as the delivery vehicle. Operation Clean Audit aimed to establish effective leadership involvement and oversight, and effective governance. The Department would be changing its approach to municipal support and ensuring greater coordination.

Several Members focused on the training, the cost, the use of consultants, asked whether this had resulted in value for money, and why positive results from the training were not apparent, and the impact of training on service delivery.  Members also asked how people were appointed to Chief Financial Officer posts without having the necessary qualifications, whether the backlog was verified or was estimated, and what authority the Department had to ensure compliance by municipalities. Members wanted to know if there had been benchmarking to ascertain what performance should be expected, and whether bonuses had been paid where service level agreements remained unsigned.
The Chairperson asked that, in view of time constraints, the answers should be given in writing.


Meeting report

Capacity building at municipalities
National Treasury (NT) briefing
Mr T Pillay, Chief Director, National Treasury, said that research conducted into capacity challenges at local government level had shown that a lot of work needed to be done towards ensuring that university curricula spoke to local government workplace needs. The Local Government Sector Education and Training Authority (LGSETA) would also need to structure Memoranda of Understanding (MOUs) with departments in order to assist in mobilising the required resources for skills training.

National Treasury (NT) would also need to engage further with the Development Bank of Southern  Africa (DBSA) around its development mandate. It was also engaging with the Department of Cooperative Governance and Traditional Affairs (COGTA) on how to improve governance arrangements, as this could lead to improved service delivery. As many training programmes were done through consultants, there was a need to monitor them more closely, and ascertain whether there was quality delivery. As at 31 July 2010, there were 1 181 interns across the 283 municipalities in the National Treasury’s Municipal Finance Management Internship Programme. Municipalities were encouraged to retain these interns for permanent appointments after the training period.

Budget and Treasury Offices (BTO) within municipalities had shown that problems included the weak delegations of financial management responsibilities, shortages of key skills, widespread use of consultants in the preparation of annual financial statements, and generally a limited base of experience and financial management qualifications in most municipalities.

National Treasury undertook regular visits to Provincial Treasuries, especially those who experienced challenges in implementing the Municipal Finance Management Act (MFMA). The conditions for the  Financial Management Grant included the appointment of a minimum of five interns and a qualified Chief Financial Officer, the establishment of Supply Chain Management and Internal Audit units, and ongoing review, revision and submission of MFMA implementation plans to National Treasury. There must also be improvement of the financial and reporting systems and implementation of MFMA reforms, the acquisition of financial management systems that could produce multi-year budgets, as well as compliance with the MFMA competency levels, and preparation of a financial recovery plan and implementation plan where applicable.
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Development Bank of Southern Africa (DBSA) briefing
Dr Paul Kibuuka, Managing Director, Development Bank of Southern Africa, said that the role of the Development Bank (DBSA) had, since 1983, evolved in line with government’s priorities. The Development Fund provided four products and services in the areas of expertise, grant funding, development facilitation, and local economic development initiatives. DBSA also housed five major programmes. Siyenza Manje deployed experts to low-capacity municipalities. Vulindlela offered accredited training to municipalities and government departments. Agencies assisted donors and development partners to implement development initiatives, while the remaining programmes dealt with Rural Development and Community Development Facilitation.

Dr Kibuuka said that an analysis undertaken into socio-economic and institutional backlogs had shown that unemployment stood at 28% and the poverty rate stood at between 40% and 70%. In addition, 54% of municipalities produced poor quality audit reports. 20% of municipalities had been declared to be in financial distress. Vacancy rates in municipalities stood at 33%. The backlog for operations and maintenance backlogs totalled R122 billion. Some of the challenges faced by municipalities included insufficient funds for projects to address infrastructure backlogs, lack of efficient financial management and billing systems, low revenue bases, non-compliance of supply chain management and procurement processes, high vacancy rates and a lack of planning capacity.

The Siyenza Manje programme ensured that capable human resources were deployed to municipalities, with the purpose of building institutional and human capacity and unlocking service delivery blockages. The funding for the programme came from the National Treasury as well as the DBSA. The key driver for the programmes budget was remuneration. Capacity development areas of this programme included finance, technical, planning, institutional capacity building and institutional turnaround.

South African Local Government Association (SALGA) briefing
Mr Reuben Baatjies, National Director: Intergovernmental Relations, South African Local Government Association, said there were a number of capacity constraints which needed to be addressed. These included the poor skills base, lack of career pathing, lack of skills development programmes and under-investment in people, particularly where technical, management and leadership skills were required. There were serious leadership and governance challenges, as well as inadequate human resource capital. The key strategic anchors of the South African Local Government Association (SALGA) were to facilitate thought leadership, advocacy, coordination and authentication. SALGA’s capacity building projects included Local Democracy and Local Governance (LODLOG), Gender Mainstreaming and Local Governance (GEMLOG) and Local Labour Forum (LLF). In the latter project it partnered with LGSETA, while LODLOG and GEMLOG were done in partnership with Swedish partners. Other projects were the Municipal Skills Development Programme, Councillor Induction (in which it partnered with CoGTA and LGSETA) and Councillor Development (where it partnered with LGSETA). Its P3 Programme was aimed at facilitating interaction between local authorities and non-state roleplayers, in different contexts, and at supporting an increased role for local authorities in the decentralisation process, while strengthening the capacity of civil society organisations and local authorities. Certain municipalities in the Eastern Cape, Free State and Western Cape were selected for this programme. 

There was a need to invest in accredited capacity building programmes for politicians and officials. It was also necessary to provide attractive career paths and associated incentives for municipal staff, as well as to ensure that officials possessed the requisite skills. Support for the Siyenza Manje programme also should be extended to more municipalities. Political interference and influence needed to be actively discouraged when appointing staff, especially when this happened at the expense of acquiring the requisite skills. More creative responses were required to address the skills shortage.

Department of Cooperative Governance and Traditional Affairs (COGTA) briefing
Dr Simphiwe Mngadi, Executive Manager: Local Government Capacity, COGTA, said that COGTA’s Project Consolidate, which ran from 2004 to 2006, was a targeted support and engagement programme, which had shown that a direct, institutionalised and hands-on approach was preferred. The role of provinces was also critical in facilitating, supporting and monitoring development, service delivery and good governance at municipal level.

COGTA’s Five-Year Local Government Strategic Agenda had three main objectives: to mainstream hands-on support in order to improve municipal governance, performance and accountability, to address the structure and governance arrangements of the State, in order to better strengthen, support and monitor local government, and to refine and strengthen the policy, regulatory and fiscal environment for local government, also paying greater attention to enforcement measures. Its Municipal Systems Improvement Grant (MSIG) was aimed at assisting municipalities in building in-house capacity in order to perform their functions, as well as stabilising institutional and governance systems. The Municipal Infrastructure Grant (MIG) was aimed at supporting capacity building through Project Management Units.

COGTA had sector partnerships with National Treasury, DBSA, and the Department of Water and Environmental Affairs (DWEA). Challenges in relation to capacity building included the fragmentation of initiatives, limited progress in respect of key indicators such as filling of vacancies across municipalities, and a lack of critical skills in engineering, town planning and financial management. Although a range of interventions had been initiated, and many successes recorded, challenges still remained. COGTA’s Local Government Turnaround Strategy was aimed at restoring the confidence of people in municipalities as the primary delivery vehicle of the developmental State at local level. It also sought to re-build and improve the basic requirements for a functional, accountable, responsive and efficient developmental local government, as well as move toward a differentiated approach to municipal planning, finances and support. COGTA’s Operation Clean Audit aimed to ensure adequate leadership involvement and effective oversight, effective governance arrangements and financially conducive environments. In future, COGTA would focus on a differentiated approach to municipal support and capacity building, and would also focus on ensuring a single window of coordination in providing support and intervention strategies in provinces and municipalities.

Discussion
Mr B Skosana (IFP) asked how the political nature of capacity building could be included in these initiatives. He also wondered how the issue of ensuring the delivery of quality infrastructure could be addressed, and whether the periods set out for, and quality of, training, were adequate.
  
Mr N Singh (IFP) suggested that all the presenters should formulate a single response, to effectively address the issue of capacity building.

Mr J Gelderblom (ANC) asked why the training of officials had not yielded any positive results. He asked whether any monitoring was done as to the efficiency of the training courses. He was also concerned why so many consultants from outside the relevant areas were being utilised, when people from within these municipalities could be sourced.
 
Ms B Ngcobo (ANC) asked to what extent the financial resources poured into capacity building had yielded value for money. She also asked if rural municipalities could be technologically capacitated.
 
Mr L Ramatlakane (COPE) asked whether the backlog quoted was estimated or relied on accurate figures. He also asked why some Chief Financial Officers were appointed to this post, despite not having the relevant qualifications.
 
Mr G Snell (ANC) asked COGTA what authority it had to ensure compliance by currently non-compliant municipalities. He also asked whether there was any benchmarking being done to ascertain what kind of performance could be expected from municipalities. He also questioned the impact of training on service delivery.
 
Ms R Mashigo (ANC) asked why there was a need for consultants, when there were 600 people already training staff, and enquired about the costs. She asked when the water programme had started, and what the effects of it were on service delivery. She asked for the rand value of the funding, and how many people were being trained with the allocated funding.  She also wanted to know what the expenses of training were. She enquired whether any bonuses were given where there were unsigned service level agreements.

The Chairperson noted that time constraints prevented all the questions being answered in the meeting. He thus asked that a final point be made by each presenter, and that all the responses should be provided to the Committee in writing.

Mr Pillay said that improvements would need to be made around monitoring and evaluation. There were challenges in that municipalities were finding their reporting too onerous. Apart from withholding grants, National Treasury did not have many tools to enable it to manage grants effectively.

Mr Elroy Afrika, Director-General, COGTA, said that the Department had a number of ideas around implementing a single window of coordination, and would be providing the Committee with a progress report on its progress.

The meeting was adjourned.




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