Development Bank of Southern Africa (DBSA) on Siyenza Manje programme's achievements & challenges: briefing; Auditor-General, National Treasury, South African Local Government Association, & Financial and Fiscal Commission input

NCOP Finance

31 May 2011
Chairperson: Mr C de Beer (ANC – Northern Cape)
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Meeting Summary

The meeting, which followed up on the one held the day before, heard the Development Bank of Southern Africa give a short briefing on the Siyenza Manje programme before discussion and inputs from various role players within Government. It heard that as from 01 April, the Bank would not be responsible for the Siyenza Manje programme anymore. Financial management would fall under the Department of Finance and technical aspects under the Department of Cooperative Governance and Traditional Affairs.

The Bank said that given the state of disrepair of local government, Siyenza Manje was a credible platform for an intervention launched in uncharted territories. What was being proposed for Siyenza Manje would lead to the scale of change that was required. The programme had started in 2006 with the Bank wanting to provide hands on assistance to municipalities with backlogs. These municipalities had been unable to recruit people to key positions and had requested the Bank’s intervention. These interventions eventually occurred at all levels of Government including national and provincial. The Siyenza Manje model was driven by deployments to municipalities which had 40-60% vacancy rates while providing on the job training to graduates who, it was hoped, would be absorbed into the municipalities on completion of their training. 20% of the young professionals had already been absorbed by municipalities. The Bank had commissioned a three year review, receiving feedback that the majority of the problems municipalities faced were structural in nature.

It was desirable to do the Siyenza Manje programme, because municipalities had not been able to access Municipal infrastructure Grant funds as they had not had the capacity to process the paperwork to unlock them. Ultimately a solution needed a more holistic, collective approach. The problems had not only been at local government level so the Bank had had to deploy to district, provincial and national levels. The delivery of infrastructure had to be through an integrated approach at all levels and, in doing so, increase the Municipal infrastructure Grant funds unlocked and spent. It had been correct to review and change the strategy because this project was far bigger than what the Bank could handle. The Bank had given input to the Department as 5 000 projects would be migrating to it. There had been 11 000 training interventions.

Members said that some municipalities had deployments which had become part of the problem by creating more problems. What was the Bank doing to ensure quality in deployments? How many municipalities in which the Bank had intervened could now operate on its own? What was the impact of high vacancy rates on municipalities? Was there any impact on the negative audit opinions municipalities received? What were the reasons for splitting Siyenza Manje and what were the advantages of the split? Did the people deployed have the mandate to override the municipal chief financial officer? Why did the Bank not build a shared technical service? Members felt that the term ‘young professional’ was misleading. Did the Bank intend to change the term? Members said that part of the role of the Bank was to deploy capable people to develop the capacity of human resources in the municipalities. R1 billion had been allocated for Siyenza Manje. What was the breakdown of how the money was spent? Members felt that the biggest challenge facing the programme was the lack of skills in the country.

The Special Purpose Vehicle programme advised that, to turn around municipalities, there had to be sustainable interventions. Siyenza Manje deployees had to be given authority, capacity building had to be bonded, municipalities had to improve performance, spending and the quality of the funds spent, and interventions had to be differentiated.

The National Treasury reported that the necessary structures were in place but were not being effectively utilised. Local forums were not working and joint sittings of the provinces were not happening and might have to be institutionalised going forward. One of the challenges was the power and functions of municipalities between which disjunctures existed.

The South African Local Government Association recommended that Siyenza Manje should be anchored by rooting it in Municipal Turn Around Strategies level implementation frameworks. The split between the Departments of Finance and Cooperative Governance and Traditional Affairs had to be managed and coordination between them would be a crucial issue.

The Financial and Fiscal Commission pointed out a lack of strategic direction from the Departments.


Meeting report

Introduction
The Chairperson said that the purpose of the meeting was to zoom into the Siyenza Manje programme that was developed to assist local government and the provinces and to get closer engagements between the various stakeholders. He said that as from 01 April Siyenza Manje would not be with the Development Bank of Southern Africa (DBSA) anymore. Financial management would fall under the Department of Finance and technical aspects with the Department of Cooperative Governance and Traditional Affairs (CoGTA). The Committee would thus call Finance and CoGTA to give action to the plans that had been initiated by the DBSA. He asked if there had been any interaction by the Departments and the Bank. He had asked the Bank the day before to provide a report on who had been deployed where, to do what.

Mr Neels van Rooyen, Chairperson of the Public Accounts Committee, Free State Legislature, said that some municipalities had deployments which had become part of the problem by creating more problems. What was the Bank doing to ensure quality?

Mr B Mashile (Mpumalanga, ANC) asked how many municipalities in which the Bank had intervened could now operate on their own. He felt the term ‘young professional’ was misleading. Did the Bank intend to change the term?

Development Bank of Southern Africa (DBSA) on Siyenza Manje: briefing
Mr. Paul Baloyi, Director and Chief Executive Officer (CEO), DBSA, said that’ given the state of disrepair of local government, Siyenza Manje was a credible platform for an intervention launched in uncharted territories. What was being proposed by CoGTA would lead to the scale of change that was required.

Dr Paul Kibuuka, Group Executive, DBSA, said the programme had started in 2006 with the Bank wanting to provide hands on assistance to municipalities with backlogs. These municipalities had been unable to recruit people to key positions and had requested the Bank’s intervention. These interventions eventually occurred at all levels of Government including national and provincial. The Siyenza Manje model was driven by deployments to municipalities which had 40-60% vacancy rates while providing on the job training to graduates who, it was hoped, would be absorbed into the municipalities on completion of their training. 20% of the young professionals had already been absorbed by municipalities. The Bank had commissioned a three year review, receiving feedback from 150 officials that the majority of the problems it faced were structural in nature. Siyenza Manje would be unbundled into two streams, one dealing with finance and the other with technical matters. The Bank would not be responsible for the programmes.

Mr. Baloyi said the answer to Mr Mashile’s introductory question was no, because the problem was bigger and deeper. But, if the question was whether it was desirable to do Siyenza Manje, then the answer was yes, absolutely, because municipalities had not been able to access Municipal Infrastructure Grant (MIG) funds as they had not had the capacity to process the paperwork to unlock them. Ultimately a solution would need a more holistic, collective approach. On the term ‘young professionals’, he said that it was never the Bank’s intention to mislead; they were recent graduates who needed to acquire professional certification. 170 had received this certification and had not been lost to the private sector. The problems had not only been at local government level, so the Bank had had to deploy to district, provincial and national levels. The delivery of infrastructure had to be through an integrated approach at all levels and in doing so, increase the MIG funds unlocked and spent. It had been the correct approach to review and change the strategy because this was far bigger than what the Bank could handle. The Bank had given input to CoGTA as 5 000 projects would be migrating to it. He acknowledged that there had been some deviant people deployed, but they had been withdrawn and lessons had been learnt on how not to do it. There had been 11 000 training interventions.

Discussion
Mr T Chaane (North West, ANC) said that part of the role of the Bank was to deploy capable people to develop the capacity of human resources in the municipality. R1 billion had been allocated for Siyenza Manje. What was the breakdown of how the money was spent?

Mr Baloyi replied that there had been 5 000 projects in 200 municipalities. He would provide a detailed report within seven days.

Adv R Tau (Northern Cape, ANC) asked what the impact of high vacancy rates on municipalities was. Was there any impact on the negative audit opinions municipalities received?

Mr Van Rooyen asked why the Bank became involved in the Siyenza Manje project if only 20% were absorbed into municipalities. He added that the provinces had never received the Bank’s annual reports even though it operated in the provinces. The Bank had to realise that there were three spheres of Government. The biggest challenge facing the programme was the lack of skills in the country.

Mr M Makhubela (Limpopo, COPE) asked what the reasons for splitting Siyenza Manje were and what the advantages of the split were.

Mr
Howard Yawa, Chairperson of Portfolio Committee on Provincial Affairs and Finance, North West Provincial Legislature, asked if the people deployed had the mandate to determine what could and could not be done. Could they override the municipal chief financial officer (CFO for example?

A Member asked why the Bank had not built a shared technical service. Could the Bank give more detail in its presentation to avoid the Members from making assumptions?

The Committee’s researcher asked if the Bank was investigating allegations that officials were involved in tender irregularities and if there were any other investigations occurring currently.

Mr Baloyi replied that, given the expectations around the Siyenza Manje programme, it could not be done by the Bank as it would be growing in scale. He acknowledged that a lack of skills was a challenge.

Mr Kibuuka said the Bank had spent R1.3 billion of which 70% came from Treasury and 30% came from the Bank. It had assisted municipalities in drawing up job specifications and had sat on the interviewing panel. It had participated with CoGTA in Operation Clean Audit. The Auditor General’s office had made presentations to deployees in the finance departments at municipalities. It had received no complaint on the conduct of deployees. Internal processes had taken care of violations of subsistence and travel claims issues. It had recruited and deployed people in their home municipality so as to attain a greater absorption rate. There were functionally two lines of reporting by the deployee. One was to the CFO of the municipality and the other was to the Bank. All deployees had to comply with the municipality’s code of conduct and they fell under the DBSA’s disciplinary process. Deployees had not been sent to replace, but to assist, therefore they had no authority over the CFO.

The DBSA said that there was interaction with the provinces through the Department and the collective provincial cabinet but there was no structured mechanism with provincial legislatures.

Auditor-General, National Treasury, South African Local Government Association, and Financial and Fiscal Commission: input
The Auditor General’s office said that costs had been R1 million in 2007/08 and had risen to R13 million in 2009/10.

The Special Purpose Vehicle (SPV) programme advised that to turn around municipalities, there had to be sustainable interventions. The Siyenza Manje deployees had to have the authority to tell the municipal CFO that what he was doing was wrong. Capacity building had to be bonded to the various levels of Government. Municipalities had to improve their performance, spending, and the quality of the funds spent. Interventions had to be differentiated, being more stringent on the larger municipalities and more supportive of the smaller municipalities.

Mr
T Pillay, Chief Director: Local Government, National Treasury, said the necessary structures were in place but were not being effectively utilised. Local forums were not working and joint sittings of the provinces were not happening and might have to be institutionalised going forward. One of the challenges that had to be addressed was the power and functions of municipalities, between which disjunctures existed.

The South African Local Government Association (SALGA) said the interventions exposed major challenges. Siyenza Manje should be anchored by rooting it in
Municipal Turn Around Strategies (MTAS) level implementation frameworks as there was a need to move Siyenza Manje away from its historic role of plugging gaps to one where gaps were filled and skills were developed simultaneously. Perhaps it needed extra functions and mandates. Siyenza Manje had the potential to be a well designed, coordinated model for Government at all levels. The structure of the national departments was not conducive to do basics like roads, water and sanitation. The split between Finance and CoGTA had to be managed and coordination between them would be a crucial issue.

Mr Bongani Khumalo, Acting Chairperson, Financial and Fiscal Commission, said the discussion highlighted the issues the Commission had been raising regarding capacity building at local government level. There was a lack of strategic direction from the Departments.

The Chairperson ended the meeting by noting that the Committee would be meeting with the International Monetary Fund (IMF) in a joint meeting the following week.

The meeting was adjourned.

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