Appropriations Bill [B3-2011]: hearings with Department of Cooperative Government and Traditional Affairs

Standing Committee on Appropriations

31 May 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Department of Cooperative Government and Traditional Affairs briefed the Standing Committee on matters pertaining to the Appropriation Bill [B3-2011] including the Department’s expenditure outcomes for the past financial year, the reasons for its under-expenditure and a request for a roll-over of funds from the 2010/11 financial year.

The Department's total appropriation for the 2010/11 financial year had been R44 573 119 000. Under expenditure (surplus) amounted to R115 202 000 and was incurred under the Compensation of Employees, Capex and Goods and Services and Transfers. Under-expenditure was attributed to vacant posts not filled on time and delays in the procurement and delivery of furniture and projects being implemented late. The Department reported that most of the Senior Management posts had now been filled and this would normalise the negative staff compensation trend. The perception that the Community Works Programme Budget had been under spent and that this had resulted in less work opportunities was corrected, as it was reported that the Department had exceeded its target for job creation in the past financial year.

The 2011/12 Medium Term Expenditure Framework allocation for the Department was R47 934 580 000. The Department had requested having separate votes as it was actually two Departments under one Ministry; the process was being negotiated with National Treasury and was set to be finalised by the next financial year. The Department was also going to administer the Siyenza Manje allocation which had been transferred from the Development Bank of Southern Africa.

Members raised serious concerns about the recurrent local government protests and whether they were related to the withholding of funds from certain municipalities. Queries were raised about the Municipal Infrastructure Grants and whether the 15% allocation for sports facilities should be discretionary. The timeframe for the operationalisation of the Special Purpose Vehicle which was aimed at addressing lack of capacity and infrastructural needs of municipalities was also queried. Further questions raised concerned the establishment and funding of ward committees, the relationship and interaction between the Department and the three spheres of Government and the cultural practices of initiation and ukutwala.

Meeting report

Welcome and Opening Remarks
The Chair welcomed the Director-General (DG), Mr Elroy Africa, and his delegation noting that the Department of Cooperative Governance and Traditional Affairs (CoGTA) was two departments in one.

Mr Africa responded that the Department would clarify its status later. He also welcomed Ms Marissa Moore, Acting Chief Director of Public Finance. He noted that the Department's Budget had been presented to Parliament the previous day and that some Members had been unable to attend the session.

Mr Africa introduced Prof Charles Nwaila, Director-General, Department of Traditional Affairs.  Mr Africa stated that the Ministry was commonly referred to as Cooperative Governance and Traditional Affairs (CoGTA) and that at present Cooperative Governance and Traditional Affairs functioned under one vote. This was reflected in the Appropriation Bill where there was one budget vote for both Departments. The Department had engaged with the Chairperson on the appropriateness of this arrangement and the Department was negotiating a scenario where each department would have its own vote.

Mr Africa introduced the Senior Management Staff members of CoGTA who were present, including Mr Ricardo Hansby, Deputy Director-General, who was responsible for Infrastructure and Economic Development, Mr Muthotho Sigidi, Deputy Director-General who was responsible for Governance and Intergovernmental Relations (including intergovernmental fiscal relations) and Mr Nhlakanipho Nkontwana, Special Advisor to the Minister. Mr Africa stated that the Chief Financial Officer (CFO), Mr Mawethu Mthuyda, would give an overview of the presentation on the Appropriations and he would be supported by inputs from the DGs and senior staff.

The Chairperson noted that the documentation had not been received in advance as stipulated and cooperation was expected in future. He also hoped that it would be the last year in which the Department had a joint budget vote.

Department of Cooperative Governance & Traditional Affairs (CoGTA). Presentation
Mr Mthuyda stated that the CoGTA combined presentation gave a summary of the expenditure trends for the 2010/11-2011/12 financial years (see presentation attached).  The expenditure outcomes per programme and per economic classification of the 2010/11 financial year were presented and the CFO accounted for the under-expenditure and indicated measures to improve the expenditure trends in the present financial year. In this context, CoGTA was requesting the Roll-over of Funds from the 2010/11-2011/12 Financial Year.

The CFO referred to the summary of the expenditure estimates for the 2010/11-2011/12 Financial Years and noted that CoGTA's Total Appropriation for the 2010/11 Financial Year had been R44 573 119 000. After expenditure the Department had a surplus of R115 202 000 which derived from under expenditure for the following Economic Classifications: Compensation of Employees; Goods and Services; Transfers and Subsidies and Capex. The CFO attributed the reasons for this under-expenditure for the Compensation of Staff to vacant posts not being filled in time and delays in the procurement and delivery of furniture, projects implemented late and projects not completed during the year in respect of the Community Works Programme (CWP).

Mr Mthuyda indicated the measures that were being adopted to increase the expenditure trends in the current financial year. In terms of the compensation of employees, he noted that 92% of Senior Management posts had been filled and 12 posts would be filled by the end of June which would normalise the staff expenditure trends.

CoGTA would also intensify the Project Management Approach for projects identified in terms of the Municipal Infrastructure Grant (MIG) and other projects and this would be linked to the budget and performance Outcomes of CoGTA.

The Chairperson asked for clarity on these Outcomes.

Mr Africa responded that Cabinet had adopted 12 Outcomes which Government would prioritise in terms of service delivery and implementation. CoGTA was integrally instrumental in Outcome Nine which was to ensure a responsive, accountable, effective and efficient local government system.

A Procurement Plan that included ensuring that service providers were in place had also been developed which was linked to the Project Management Process.

Measures such as progress reports had been put into place to ensure the Monitoring and Evaluation of expenditure and projects. A Provincial Support Technical Unit (PSTU) was in place to ensure that projects stayed on course.

The CFO reported that the 2011/12 Medium Term Expenditure Framework (MTEF) allocation for CoGTA was R47 934 580 000 and indicated the financial resources per programme, i.e. Administration; Policy, Research & Knowledge Management; Governance & Intergovernmental Relations; National Disaster Management Centre; Provincial & Municipal Government System; Infrastructure and Economic Development and Department of Traditional Affairs (see presentation attached).

The Community Work Programme (CWP) which created work opportunities for historically marginalised communities was allocated R243 million in line with the priority that Government had placed on job creation. The Special Purpose Vehicle (SPV) initiative which was aimed at supporting weak municipalities which had low capacity and infrastructural delivery challenges, received an allocation of R192 million.

The CFO noted CoGTA's responsibilities in managing and transferring the Municipal Infrastructure Grant (MIG), the Municipal Systems Improvement Grant (MSIG) and also in respect of the equitable share to municipalities. He emphasised that CoGTA was committed to the local government turnaround strategy which included strengthening municipalities at ward committee level and by ensuring that their Integrated Development Plans (IDP) were implemented.

Mr M Swart (DA) noted the Department's commitment to job creation through the Community Works programme and the budget allocation made for this. Given CoGTA's record of under-expenditure in the previous financial year he speculated whether the Department would fare any better in the current financial year.

Mr Swart referred to the slide on the Expenditure Outcome Classified per programme in the presentation and noted that the percentages supplied per programme did not add up to the Grand Total figure of 99.7% indicated. He also noted that there had been considerable under-expenditure under capital assets in the 2010/11 financial year and yet the Department had allocated a substantial amount for capital projects in the current financial year.

Mr Swart noted the objective of strengthening the ward committees’ capacity after the local government elections. He asked how CoGTA proposed to do that as councillors who should chair meetings often failed to turn up.

Dr P Rabie (DA) stated that the Portfolio Committee on Economic Development had visited the North West Province and at the Department of local Government in Rustenburg, Members had been informed that one of the reason that there was a lack of service delivery in some of the areas, was that there was no adequate dialogue between the provincial government and the local government. Dr Rabie asked how communication took place between CoGTA, local government and the provinces as they had been informed that decisions were often taken in isolation Dr Rabie observed that a thorough needs assessment should be done on service delivery.

Dr Rabie noted that in the presentation (slide 13) it was stated that the Department of Traditional Affairs would focus on finalizing policies on traditional cultural practices such as initiation schools and ‘ukuthwala’. He asked for a report back on that as it was receiving a lot of publicity in the press and there had been a lot of deaths resulting from initiation. Human Rights and Women's Rights groups had expressed their disapproval of ‘ukuthwala’. What was being done to regulate this practice?

Mr J Gelderblom (ANC) referred to CoGTA's plans on monitoring and evaluation and noted that some municipalities still had problems in terms of their budgets and Treasury's regulations. He observed that it was critical to assist municipalities to ensure sound administration and he asked how CoGTA was going about doing this. He also shared Mr Swart's concern about the Community Works Programme (CWP).

Ms R Mashigo (ANC) queried the reason given for under-expenditure on Capex which was that furniture was not bought as staff had not been employed. She added her concern to those of Mr Swart on the budgeted amount for goods and services and the CWP. She noted that the Community Works Programme was very important and it was of great concern if the budget was under-spent. She was also concerned about the Municipal Infrastructure Grant (MIG) and asked how it was requested and at what stage the money was transferred as progress was slow to the completion of a project.

The Chairperson asked Ms Moore to clarify the process.

Ms Moore responded that with regard to the budget structure change, until CoGTA's budget allocation was split into two votes, there could not be a definite answer. If CoGTA wanted to speed up the process, Treasury should be supplied with the historical figures that would reflect that Cooperative Governance and Traditional Affairs had existed as separate Departments for the past three years. This would help as Treasury had to build up a new structure as if it always existed over the last few years. This would speed up the approval in the adjustment of the budget process.

A Member noted that the numbers presented in CoGTA's submission and in the Appropriation Bill were not the same and that there was approximately R200 million difference in the Transfer Services and she asked for clarity on this discrepancy.

The Chairperson asked if she could provide clarity on the R80 million that had been withheld from Ekurhuleni.

Ms Moore responded that she understood that where local government had received conditional grant money, the Revenue Division required surrender of unspent funds or it had to be motivated that the money be rolled over to the next financial year. What had been found in the case of various grants was that the grant had not been surrendered to the National Revenue Fund and local government was thus working with money outside the legislation. To correct the situation, the unsurrendered funds were recovered from the equitable share.

The Chairperson noted that there had been a meeting between two Ministers to sort out the problem. He noted that the SPV had been mentioned in the presentation and that a lot had been heard about it initially but not recently. He asked for more information on its current status. Members had also had meetings with the Minister on infrastructure and he asked how much of the MIG could be spent on Sports facilities. He also raised the issue of the CWP and the budget allocation it had received and the previous under-expenditure. How committed was CoGTA to create the jobs as the funds were there? If the money was not utilised, it meant that the people who should have benefited were being deprived of the opportunity to have jobs. The committee would be meeting with the Department of Public Works and would engage on the Extended Public Works Programme and he noted that the grant received was growing. He asked about the interaction between the Department of Public Works and CoGTA on the creation of jobs.

Mr L Ramatlakane (COPE) said that at the last engagement with CoGTA, the Committee had requested information on the Special Purpose Vehicle (SPV) and the projected timeframe in terms of the turnaround strategy, capacity building amongst other matters. The Committee was also expecting feedback on the under expenditure in some municipalities that had led to redirection of resources to other municipalities who had the capacity to spend the money. There had been a concern that this was problematic in terms of the Constitution and the Committee had asked the Department to furnish it with the record of where such action was taken and where money was redirected. One issue that had troubled the Committee were the protests that were taking place in various municipalities and whether it was linked to the lack of service delivery.

Furthermore, Mr Ramatlakane wanted to know if there was a correlation between the protests where there had been a lack of service delivery and places where the funds had been withdrawn. He stated that he had asked for this information before and he noted the recurrence of service delivery protests recently. He wanted to know whether the backlog of issues had been cleared. He also wanted to know what informed the projected figures of the 34 municipal districts that were being targeted. Were they municipal districts that were weak or where there had been protests? He wanted to understand the rationale and the plan.

The Chairperson was interested to know what the relationship was between CoGTA and the Department of Public Works and between CoGTA and National Treasury. He noted that an amount of R3 billion was made in terms of the Neighbourhood Development Grant. This looked very complicated and he asked how the Department could ensure that municipalities accessed the grant.

Mr Africa said that his delegation would answer the questions, beginning with the CWP, which Mr Hansby would handle.

Mr Hansby placed the CWP into context and said that it was a component of the expanded public works programme and Department had a very close relationship as the wage determination was the same as the standard public works programme. The amount of money people were paid on a daily basis was part of the same Ministerial determination made by the Minister of Labour. Institutionally there was also a link as the CWP had a Steering Committee in which the Department of Public Works was a key participant, together with the Presidency and other departments. The programme had been initiated by the Presidency last year and handed to the Department.

Mr Hansby noted that there was a misconception about the spending on the CWP and that there had been a saving on the programme management fees and Department had in fact exceeded the targets for job creation. It was supposed to be that 87 000 job opportunities were created but they had exceeded that and created 93, 669 work opportunities. There was a saving on the programme management fee as there was a 10% allocation for the Department in order to appoint people and other costs for Department to administer the programme as predetermined by the norms and standards set by the Presidency. The programme was only handed over to the Department last year and Department had been unable to appoint all the necessary programme management staff. CWP required a structure which was provincially based as well. The Department was in the process of finalising that structure and part of the saving would go to programmes relating to CWP. They aimed at creating more jobs and that was why they were requesting the roll-over. They hoped to establish a factory to supply protective clothing and in the process they would create more jobs. Mr Hansby stated that 99.9% of the budget had been spent on job creation.

The Chairperson commented that Mr Hansby had not stated how much the budget was and how much had been spent.

Mr Hansby stated that the total allocation had been R490 million and 10% of that figure was used for the programme management costs. The balance of 90% was the SITE budget. 65% of the SITE budget (R286 840) went to CWP wages. Payment used to be R50-00 per day but had increased to R60-00 per day. The non-wage component was 35% which was comprised of equipment necessary for the work to be performed and that allocation amounted to R154 million. Of those amounts 99.9% had been spent.

The Chairperson confirmed that R49 million made up the 10% for the programme management.

Mr Hansby noted that in addition there were implementing agents who had piloted the programme and who had been appointed by the Presidency. They got 10% of the SITE budget and that amounted to R34 million. There were three of them and they essentially ran the office which was to administer work opportunities for over 60,000 people and to run a sophisticated payment system. Many of the people were indigent and they were brought into the system and needed assistance. Mr Hansby clarified that they were outside agencies and could be equated with consultants.
Mr Africa reiterated that the arrangement had been put into place by the Presidency and the Department had inherited it. They were deliberating on how this should be done in the future including how to develop there in- house capabilities and capacity and the arrangement was not final.

Prof Nwaila responded on the issue of initiation and Ukutwala and said the Department was also trying to address the issues in the Eastern Cape where 10 year olds and seven year olds were taken by thugs. The Department of Traditional Affairs was saying that originally Ukutwala was a source of marriage and it was done differently from the way in which it was currently being done and as reflected in the negative publicity it received. There were also issues raised by the Constitution. The policy stated that the person had to be 18 years or above and the two people had to be lovers and it was seen as a source of marriage. The current practice by thugs was considered a harmful practice and those people had to be arrested.

In respect of initiation, Prof Nwaila said that the problem was caused by 'fly by night' surgeons who claimed to be competent. The Department was working with the
Commission for Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities to ensure that this problem was addressed.

In terms of the budget vote separation process to be followed as indicated by Treasury, Prof Nwaila said the Department would supply the information in time for the next financial year.

Mr Sigidi said that he would try to answer the question of ward committees, the process of transferring MIG and the query raised by the Chairperson on the key component of MIG pertaining to the recommendation that was made that 15% should be reserved for sports facilities. With regard to ward committees, he stated that there were no ward committees that were functional and the first step would be the establishment of ward committees. The framework was still that the ward committee chairperson should be the ward councillor. The Department was also looking at capacitating ward committees to understand their role with regard to broader participation such as planning and prioritisation of service delivery matters. The Department would be utilising funding received from the European (EU) which would be used to run this capacitation process.

With regards to how MIG was transferred, Mr Sigidi said this was done in three stages as was the equitable share payable to local government. The first transfer was around June, the second was around November and the last transfer was around March. Provinces, through the provincial management units, registered projects of municipalities and then they were sent to sector departments who looked at them in terms of their own norms and standards.  An Environmental Impact Assessment (EIA) had to be conducted by the Department of Environmental Affairs then the money was transferred accordingly. The challenge had been that a number of times the municipalities implemented projects that had not undergone an EIA. Municipalities had been informed in advance that they should submit their projects according to the figures indicated in the Medium Term Expenditure Framework (MTEF) so that when it came to the year of implementation there would be projects that had been registered. Another challenge was when a municipality would submit a project that was worth R20 million and they realise that the project could only be R10 million.

With regard to the question of sports facilities, he said there had been a recommendation where CoGTA and the Department of Sport and Recreation were given three months to clarify the responsibility of budgeting for the improvement of sports facilities. The key component in MIG looked at public municipal services infrastructure and this included community halls and other infrastructure. The challenge was for the municipalities to put their priorities in the Integrated Development Plan (IDP). In the public participation process of the IDP, the highest priorities were water, sanitation and roads.

The Chairperson said that what he was hearing was that the 15% was not necessarily for sports facilities and the impression that the Committee received was that it was for sporting facilities. He said it was news to the Committee that communities could determine how to use the grant. He continued that there were no sporting facilities in the rural areas and the townships and he thought that some funds were earmarked for this but now he heard that it was discretionary and if communities wanted to do so they could change it to something else. It was not part of the equitable share and in his understanding a grant was ring-fenced.

Ms Moore agreed with the Chairperson that MIG was initially scheduled as a grant, as municipal infrastructure was a municipal function and there was discretion at municipal level on the areas that were covered, such as water, sanitation and roads. National Treasury had brought in guidelines and a formula on areas that were covered and where a portion would be discretionary for sports facilities, taxi ranks or community halls. The Grant's conditionality related to the infrastructure needs. She noted the Committee’s concerns on this matter and Treasury would consider whether there should be an earmarked grant specifically for sport facilities.

The Chairperson commented that a lot of money had been allocated and the Committee had to monitor how it was utilised. The Committee did not agree that municipalities should decide as they saw sports facilities as a waste.

Mr Sigidi said the Department had been meeting with National Treasury to look at the recommendations that the Chairperson had been making and the understanding currently was that the 15% for Sports facilities should be in the framework. All the other Departments were having norms and standards and the Department did not have norms and standards on what the sporting facilities would be like in a particular area and the 15% might be revised.

The Chairperson returned to the query of Mr Swart in terms of the total amount given which equalled 99.7% for Expenditure for the 2010/11 Financial Year and how the figure had been determined (see slide 6 in presentation): an animated discussion ensued.

Ms Moore intervened and said that because the budget reflected such vast amounts of money and high allocations were made in some categories and small amounts in other categories, the weighted average of the percentages reflected in the programmes was required.

Mr Africa appreciated that the misunderstanding had been cleared up and said that, for example in Programme 3, the amount allocated was huge compared to the other programmes.

The Chairperson stated that the Committee's major concern was that the money was spent and that there would not be a request for a roll-over.

Mr Africa said that the Development Bank of Southern Africa (DBSA) received a substantial amount from National Treasury. From the 1 April 2011 the infrastructural component provided by Siyenza Manje was taken away from the DBSA had been transferred to CoGTA. The financial management component was still under the watch of National Treasury. Initially the intention was to have the Special Purpose Vehicle (SPV) established and running within CoGTA by the 1 April 2011after the Department had received the money but this unfortunately could not take place. Mr Africa assured the Members that by June 2011 the Department would have finalised the handover process. He added that the Department had to negotiate a careful transition from DBSA to CoGTA and one of the commitments the Department had made was to ensure that there was as little disruption in terms of the current contacts and service providers.

The Department had taken over approximately 263 professionals from the DBSA. The professionals consisted of two groups; firstly there were skilled professionals and secondly a group of young professionals with less experience and they would operationalise the SPV. CoGTA was also taking on a contract from the DBSA with a South African engineers association in Gauteng. Mr Africa said that the Department was also finalising the institutional form the SPV would take, as had previously been stated by the CFO. The Department was taking a proposal to Cabinet to establish it as a government component and there were advantages to that option. Firstly it would be directly accountable to the Minister and it would be freed up from some of the normal bureaucratic processes that it would encounter elsewhere in the system. Mr Africa assured the members that the SPV was on track and its purpose was to assist municipalities in spending their money on infrastructure and to address the issues of under-expenditure and lack of capacity. He said that the SPV was going to be one of the biggest instruments and programmes to take physical warm bodies such as engineers to the areas where they were needed.

Mr Africa confirmed the comments made by Mr Sigidi on the ward committees and the Department would pursue the matter of funding of ward committees with Treasury.

Mr Africa responded to the question of the relationship and interaction between the two spheres of Government, local and provincial and CoGTA. He said there were a number of structures such as Ministers and Members of the Executive Council (MinMEC) that assisted in a formal way for them to interact with each other. Firstly there was the President's Coordinating Council (PCC) which was chaired by the President and all the Premiers attended and CoGTA served as the Secretariat. It was an important structure as it allowed the President to deal with any matter pertaining to all local, provincial and national government issues that affected all spheres of government. The last PCC had dealt with the matter of job creation and the President had got all the Premiers to outline their plans for job creation in their respective provinces.

 Another important structure which was managed by CoGTA directly was their MinMEC. Here the Minister met directly with the MECs responsible for local government and they discussed everything relevant to their portfolio in this structure.

The third structure was the Implementation Forum and this forum was linked to the 12 Outcomes of the Government that were mentioned earlier in the meeting. There was a specific Implementation Forum for Outcome Nine and the relevant MECs were part of this forum as was SALGA. It was different from MinMEC in that the national Ministers also attended. This forum became the monitoring structure to see if Outcome nine was being implemented. Mr Africa added that for all the programmes such as CWP there were structures to provide feedback. In respect of the CWP and the MIG, CoGTA very often went directly to the provinces and directly to municipalities. The Department was also currently working on a policy document, a green paper on cooperative governance that would hopefully draw on the lessons since 1994 on how the different spheres of Government worked together and how local government could be taken to a higher level.

On the issue of monitoring and evaluation, Mr Africa stated that when it came to financial management in local government, National Treasury in terms of the Municipal Finance Management Act (MFMA) had very specific instruments such as reporting timeframes and requirements with which municipalities had to comply. CoGTA did not explicitly and regularly monitor financial management when it came to the 278 municipalities. CoGTA was responsible for monitoring everything else besides financial management. In terms of the turnaround strategy for local government there were a specific set of indicators that the Department expected all the municipalities to report on.

The Chairperson raised the issue of service delivery protests and demonstrations and what the Department's understanding was of what was happening.

Mr Hansby addressed the issue by referring to the Neighbourhood Development Grant and said that in an ideal world it would reside with the Department and this related to a number of issues that led to fragmentation in the system of assisting local government. Mr Hansby commented that it was a discussion which they should seriously have with Treasury and there were a number of other instruments that were being developed within the space of local government and he wished to alert the Committee to these things.

Mr Africa commented that components of the MIG had been split and a part had been transferred to Human Settlements as its mandate was to create sustainable human settlements and it needed a financial instrument to do so and it could not do this if one of its biggest resources was controlled by another department.

Ms Moore noted the informal settlement upgrading programme and that the Department of Human Settlements would have that functionality and could target the money for this purpose from MIG.

Mr Ramatlakane commented on the takeover of the 263 professional from DBSA and queried the nature of the three agencies employed. He said that the Department could respond in a memo if there was no time to respond at that stage. He said that in KwaZulu-Natal there was a different model in terms of the works programme and the transference of skills. Mr Ramatlakane noted that he had still not received a response on his earlier query about the protests and the funds that had been withheld from certain municipalities.

Mr Nhlakanipho Nkontwana, Special Advisor to the Minister, responded on the issue of the protests and said the Department needed people to drive the programmes in the provinces and to give hands on support to the municipalities. At the moment every time there was a problem in the provinces the Department had to fly from Pretoria and people preferred to go to the national Department as had happened in Balfour. The provinces should be galvanised to deal with the problems and there were people on the ground to assist. The Department’s footprint should be everywhere and officials should not have to fly from Pretoria when there was a problem.

The Chairperson asked if that meant the Department was setting up offices in the provinces.

Mr Nkontwana affirmed this.

Mr Africa said that this still had to be discussed with the MECs in the provinces. On the issue of funding, Mr Africa stated that if the Committee required additional information, the Department could supply written feedback. The withholding of funds from municipalities occurred at the end of 2009 and the beginning of 2010. At that point in time, Treasury had felt very strongly that funds had to be withheld from municipalities and money had not been transferred. Mr Africa stated that the Department had gone with Treasury to municipalities to resolve issues of capacity and other issues and they had resolved that. Mr Africa stated that his understanding was that all the funds that had been withheld had been reinstated and transferred back to the municipalities and from that perspective no one had been disadvantaged. He said he would have to come back on the query on whether it was constitutional or not. There was no consensus on this but in terms of the Municipal Finance Management Act (MFMA) it could be done but redirecting it to another municipality was another issue.

The Chairperson queried why Mr Africa had not responded directly on the issue of the transfer of funds from
Ekurhuleni Municipality and was conflating issues.

Mr Africa responded that he had been referring only to the incidents of 2009 and early 2010 and he agreed that the Ekurhulini matter was a different issue and he said he would come back on that. Mr Africa noted that the protests could not be attributed to one single cause and sometimes it related to non-service delivery and in other incidents other factors were involved. He had not encountered an analysis that had linked it to the withholding of funds.

On the issue of agencies, Mr Africa said they functioned in the context of the CWPs where three service providers had been appointed, and the Department would be reviewing that arrangement.

Mr Ramatlakane confirmed that his query related to the CWP.

Mr Chairperson cautioned that Government was not in favour of the use of consultants.

Mr Ramatlakane reiterated his query about the community protests and the lack of service delivery and whether there was a correlation between the areas where protests had taken place and where funds had been withheld. He stated that this was the information that should have been furnished to the Committee in writing as agreed to in a previous meeting. He understood that the matter had been resolved with the Treasury but Members still did not know if the withdrawal of funds was linked to the protests.

Mr Africa agreed to supply the information.

Mr Hansby clarified that the service providers employed for the CWP were Section 21 companies and they were not normal consultants. They performed more of a project management function and they managed the systems such as keeping registers to see that payment was correct and they did more than normal consultants.

Ms Moore clarified that the Siyenza Manje money reflected in the Appropriation Bill was classified as a transfer from the Department and the Department had indicated that it was located under Goods and Services in its budget. National Treasury had not received a request for the shifting of that money and for auditing purposes it should be dealt with through the provisions of the Public Finance Management Act (PFMA). For auditing purposes, expenditure which was incurred would be regarded as unauthorised expenditure if it was not transferred according to the PFMA.

The Chairperson summarised the matters discussed in the meeting and picked up on outstanding matters. He noted that the Constitution was very clear on capacitating communities and building capacity and the committee was not satisfied with the withholding of funds from communities. The issue of under spending was another concern of the Committee and it would engage with Department of Public Works that National Treasury to address the matter of the roll-overs that had been requested. The Chairperson felt strongly that the provision of sports facilities should not be a discretionary matter in terms of funding.

Mr Sigidi said he had just received confirmation that funding for sports facilities could be ring-fenced and would thus be used only for that purpose.

The Chairperson concluded that he agreed with the transfer of Siyenza Manje from the DBSA to CoGTA.

The meeting was adjourned.


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