Election of Chairperson; Briefing by Mr R Baloyi, Minister of Co-operative Governance & Traditional Affairs; Briefing by Department on Local Economic Development (LED); Briefing by Department on Anti-corruption Inspectorate

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Cooperative Governance and Traditional Affairs

14 November 2011
Chairperson: Ms D Nhlengethwa (ANC)
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Meeting Summary

The Portfolio Committee was briefed by the newly appointed Minister of Cooperative Government and Traditional Affairs (CoGTA) on the direction and priorities of the joint Ministry moving forward. They were also briefed by the Department of Cooperative Government (DCoG) on the Local Economic Development (LED) Policy and the Anti-Corruption Inspectorate which had been established in the Department in February 2011.

The Minister noted the vacuum in leadership in the portfolio in the preceding months and commited himself to promote accountability; respect for the Constitution and the separation of powers; sound inter-governmental relations between the three tiers of government as well as traditional governance structures; and  responsive, effective and efficient local government in line with Outcome Nine of government policy. The Ministry would drive the turnaround strategy forward to accelerate service delivery and promote the ' Operation Clean Audit for Sound Financial Administration' campaign. Emphasis would be placed on job creation and LED and the Community Work Programme (CWP), rural development and greater attention would be focused on issues of traditional governance.

LED was broadly defined by the DCoG as an approach to encourage investment by big business, small local business development, tourist industries or large-sector economy management in mining, manufacturing or farming. It was emphasised that all municiplaities were mandated to promote social and economic development. The LED Framework accomodated both a pro-market and pro-poor aproach and the strategies adopted included improving good governance and service delivery, market confidence in municipalities and identifying and exploiting the competitive advantage of the local environment. A  2010 review of LED had revealed that the framework was not widely used at a local level, that LED commitment had decreased as reflected in budgetry allocations by municipalities, partnerships were also not long lasting and sustainable, and projects did not have the scale that was desired. DCoG outlined measures to accelerate LED. Functional partnerships had to be established between municipalities, the local private sector as well as civil society. Local investment opportunities of scale had to be unlocked that would lead to sustainable private sector job creation and local procurement had to be leveraged. The availability of economic infrastructure at a local level, the reduction of red tape and skills development were further key elements for the future success of LED.

DCoG gave an overview of the Anti-Corruption Inspectorate, its mandate and the cases it had investigated thus far. It was constituted as a Chief Directorate in the Department and it had a close working relationship with law enforcement agencies such as the Special Investigations Unit (SIU) and the Hawks. However, it did not have a distinct legal status. The Mandate of the Inspectorate was to prevent, combat and to do preliminary investigations on reported incidents of corruption occurring in municipalities throughout the country. The Department saw it as their obligation to support municipalities in tackling corruption and in developing anti-corruption and anti-fraud plans. Their mandate also included the promotion of the Codes of Conduct for Councillors and officials as outlined in the Municipal Sytems Act of 2000. They received hotline cases refered to them by the Public Service Commission and from the Presidential Hotline. The information provided on the investigations was insufficient and the committee decided to postpone engaging with the presentation to a later date when a full report was available.

Members welcomed the Minister's commitment to accountability and that he would be adopting a more inclusive approach in respect of the portfolio's mandate as members were concerned that there had been a bias towards local government previously. His prioritisation of intergovernmental coordination and cooperation was commended as members had raised concerns about duplication and blockages when sectors worked in isolation. Members were concerned about the slow implementation of the turnaround strategy, that traditional leadership structures were ignored and that rural development had been neglected in favour of urban areas. An ANC member felt strongly that the various traditional kingdoms were being inequitably treated in terms of respect and resources. There was also a concern that the portfolio had an image problem and that local government was in a bad state.

Reactions from members on the status of LED initiatives in the Department was mixed with some seeing it as necessary while others were unconvinced that LED had delivered on its mandate. Perceptions were that although the Department was promising a new approach it was basically the same and that the Department itself had indicated that LED had failed in many respects. More information was also requested on co-operatives. The Department responded that LED was necessary because of the structural nature of unemployment and inequality in South Africa. They had to work on long term strategies and the former welfare type interventions would be replaced by more business oriented principles with greater space being created for the private sector to develop economic opportunities. The Minister indicated that they would undertake a further assessment of LED and address it in their forthcoming strategic planning sessions.

Meeting report

Opening and welcome
The Secretary of the Portfolio Committee, Ms Shereen Cassiem called for nominations for the position of Chairperson. Ms D Nhlengethwa (ANC) was nominated by Ms W Nelson (ANC) and was seconded by Ms M Wenger (DA) and other members. There were no other nominations or objections and Ms Nhlengethwa was duly elected as chairperson.

The Chairperson thanked the members across party lines for their confidence in her ability to lead the committee forward and acknowleged their commitment and that of her predecessor to their mandate. She noted that local government was the coalface of service delivery and that there were challenges which needed to be addressed by the continued good working relationship with the opposition, the Ministry and officials. She welcomed the Minister Mr Richard Baloyi to his first meeting with the committee and noted the excellent skills and personal attributes he was bringing to his new portfolio.

Ms Wenger congratulated the Chairperson on her election, noting that as the previous whip she had been exemplary and that the committee would support her in achieving their mandate.

Mr P Smith (IFP) congratulated the Chairperson and reiterated that she had the committee's support and that the opposition would fulfil its role as was expected.

Ms M Segale-Diswai (ANC) congratulated the Chairperson on behalf of her party and noted that she was proud that the committee would be led by a woman, as women brought special qualities to the position.

Briefing by the Minister
Mr Baloyi congratulated the Chairperson on her election and expressed his commitment to establishing a good working relationship with the committee under her leadership, moving forward. He remarked that he was accompanied by the the respective Director Generals of the Department of Cooperative Governance and the Department of Traditional Affairs and senior officials. He commented on the changes in the cabinet that led to his appointment to his new portfolio and noted the committee's role of holding the executive accountable and that they should be able to do that without any reservations and without any qualifications.

Mr Baloyi welcomed the meeting as an opportunity for them to get to know one another better and stated that at this first encounter, he wished to raise three matters. Firstly, they were there to commit themselves, most importantly to the promotion and respect of the doctrine and practice of the separation of powers of the State. In any democracy of note, there was the separation of powers where Parliament, the Executive and the Judiciary respectively, had a role to play as organs of State. The promotion and respect for the interface between these organs of state, was critical.The separation of powers was not just a formality in terms of arrangements between organs of state but it had its origins from the original thinkers on governance. It involved fundamental issues of power which evolved from the people and was assigned to elected representatives which in turn resided in the institution of Parliament. In constitutional states the world over, the Constitution was the supreme law of the land and amongst organs of state, Parliament was the supreme organ. The Constitution defined what was needed to be done and how it was to be done. Mr Baloyi noted that in promoting this interface, one was dealing with issues relating to power relations and thus the executive had to be accountable.  He noted the vacuum in leadership in the portfolio in the preceding months and committed himself to respond appropriately and expeditiously to remedy this.

Mr Baloyi noted his commitment to promoting sound inter-governmental relations between the three tiers of government as it was a dictate of the constitution. Cooperative governance meant that the values of the administration had be taken aboard across the three tiers of government and also the sphere of traditional governance. In the case of the latter, there had to be a perfect alignment which promoted this relationship and prevented any disjuncture occurring.

Mr Baloyi reiterated that he would respect and uphold the principle of executive accountability within cabinet as a collective. He promised his accountability in respect of questions in the house and written responses would be provided as required. He would also promote the values of the administration as outlined in the constitution such as transparency. Stakeholder engagement, responsiveness, public participation and accelerated service delivery, professionalism and good governance would be prioritised 

The second issue emphasised by Mr Baloyi was the commitment of the joint Ministry of Cooparative Governance and Traditional Affairs (CoGTA) to Outcome Nine in terms of the pronouncements on responsive, accountable effective and efficient local government. He acknowledged the announcement and commitments made by his predecessors and noted that he did not look at them as personal commitments but as pronouncements of the position of the portfolio. Furthermore, he acknowledged that there was a turnaround strategy and that it had been developed after an assessment of the state of municiplalities. He noted that he had instructed the portfolio to conduct an assessment which included meeting and engaging with stakeholders on the turnaround strategy. The portfolio committee as the oversight body would also be invited to reflect on the turnaround strategy. They would then meet with the committee to present how they saw themselves driving the turnaround strategy forward and improving it to accelerate service delivery.

Mr Baloyi drew attention to the campaign 'Operation Clean Audit for Sound Financial Administration' and that there had to be a commitment to see that it was not just talk but realised in action. He commented generally, that he would like to see things getting done and that they could not continue to speak about a turnaround strategy and no progress was being made. Thus, supporting the institution of traditional rule should not only be done on a superficial level. He noted that a White Paper on Traditional Leadership and Governance relating to Chapter 12 of the Constitution had not been developed alongside the White Paper on Local Government in 1998. When the debate on wall to wall municipalities was concluded, there had been a gap. This gap had been closed at a later satage, with the Framework Act on Traditional Leadership and Governance. With this Act and provincial legislation in place, the question was how to move forward in terms of what had been envisaged and implementing it and dealing with issues as they arose.

Thirdly, Mr Baloyi noted the commitment to job creation and that there would be a presentation on the Community Work Programme (CWP) in this respect. Service to government through CoGTA initiatives would be aimed at ensuring that people in deep rural areas and in urban areas, businesses and broader civil society would refer to municipalities as 'my municipality, my services'.  Municipalities were the coalface of service delivery and received criticism even when the failure to deliver lay at provincial and national level. Sector coordination with these tiers of government and with traditional leadership was necessary to facilitate development. Processes should be developed whereby traditional institutions would come to be seen as the pride and inheritance of the nation and played a meaningful role in the country's democracy so that people could say 'my traditional institutions, my pride' .

Mr Baloyi raised issues relating to the current status of CoGTA and whether they were organised to meet the challenges confronting them and were able to execute their political mandate. He noted that these issues would be addressed with the committee in their follow-up engagements which he anticipated would be robust and assist in taking CoGTA forward.
The Chairperson thanked the Minister for his input and noted that some of the issues he had raised had been highlighted in the committee's Budgetry Review and Recommendations (BRR) Report. In their recommendations they had put dates and deadlines which had to be met by CoGTA and the Minister was invited to respond to the issues they had raised. The Committee would be formulating their strategic plan at the end of the month and would be making an assessment internally, in preparation for the following year.

Mr Smith congratulated the Minister on his appointment and expressed his appreciation of the points he had made particularly those relating to the role of the legislature and his undertaking to 'walk the talk'. He commented on the existing institutional arrangements which in CoGTA and noted that the Ministry had an image problem. He trusted that there would be a positive change and that there would be nothing from the side of the Ministry that would cast aspersion on the Department as that had been a problem in the past six months. He refered to the Minister's statements on the 'clean audit campaign' and he trusted that he would ensure that his own Department was exemplary and prioritised having a clean audit every year. He was pleased that the Minister would concentrate on the implementation of the turnaround strategy and ensuring that it worked and was successful. He noted that the history of the Department since 1994, showed that they had basically concentrated on local government. It used to be called Local Government and Provincial Affairs, but it had done nothing in terms of the provinces except pass a Bill about intergovernmental relations. There had never been much leadership or interest in the coordination of the three tiers of government to ensure that delivery took place. He noted that Mr Baloyi had given an undertaking to address this, as local government was only part of what CoGTA was mandated to do.

Nkosi Z Mandela (ANC) congratulated the Minister on his appointment and thanked him for the briefing. However, he was cautious and sceptical about his statements on the issues of traditional leaders in the country. The Department continued to talk about a turnaround strategy and yet it took the Department over two years to effect changes in traditional leadership structures. He questioned these delays and he commented that in the village from which he came, there had been a problem since 2009 in respect of removing a headman and the matter was still pending  The treatment from the Department of various kingdoms was also problematic. They had been invited by the Acting Minister to attend a King's Fora with the deemed kings and the current kings, and that was a conflict of its own. What was the Department's vision for settling the challenges that had arisen from the pronouncement by the President on Kingships ? Of concern to traditional leaders was the lack of consistency on behalf of the Department in dealing with different kingdoms. They were still facing the situation where the Zulu Kingdom was provided with all the services. They had 105 security personnel of all ranks but the other kings were not rendered the same services. How would the Department ensure that they rendered the same services to the Monarchs? A disturbing matter was that Prince Charles had recently visited the country but none of the kingdom's were contacted except that of the Zulu's. Why did they continue to have this inconsistency while there was a department that was meant to protect and preserve the institutions and why was it not playing its role?

Mr P Lorrimer (DA) wished the Minister well and stated that none of the committee members underestimated the size of the task taken on by the Minister as local government was in a dreadful state. He commented that if  the Minister did what he had commited himself to do, huge strides would be made in rectifying this. He noted that he would hold the Minister accountable in terms of his statements.

The Chairperson stated that there were big challenges ahead and agreed with members that they had been focused on local government and not on leadership and support in respect of provincial and national coordination and this had to be resolved.

Local Economic Development (LED) in South Africa
Mr Elroy Africa, Director General, Department of Cooperative Governance (DCOG), congratulated the Chairperson on her appointment. He noted that the presentation gave the Department's perspective on local economic development. He emphasised that in Chapter three of the Consitution, all municiplaities were mandated to promote social and economic development. LED was not new and it had tended to have an urban bias as it had been concentrated in urban centres initially. DCOG wanted to see it elevated from isolated local development intervention mainly in urban areas, to a position where it cut across all municipalities. There had been an evolution since 2005 that reflected a new policy maturity and there had been greater involvement by a range of different stakeholders. Policy guidelines had been released in 2005 and this had resulted in a National Framework Document on LED in 2006. LED received prominence in the five year Local Government Strategic Agenda and Implementation Plan of 2006 and other policy interventions including the 2009 Local Government Turnaround Strategy. In 2010, two critical assessments were conducted on LED.

 Mr Africa outlined the LED Framework and noted that it tried to accomodate both a pro-market and pro-poor aproach (see presentation attached).The strategies adopted included improving good governance, service delivery and market confidence in municipalities; identifying and exploiting the competitive advantage of the area; intensifying enterprise support in the loacal area; and introducing community investment programming.

The findings of the 2010 LED review were that the framework was not widely used at a local level; LED comittment had decreased as reflected in budgetry allocations; and there was a need for increased coordination between sector departments, stakeholders and the three tiers of government. Partnerships were also not long lasting and sustainable and projects did not have the scale that was desired.

However LED still remained a priority. In the Turnaround Strategy it had been broadly defined as an approach to encourage investment by big business, small local business development, tourist industries or large-sector economy management in mining, manufacturing or farming.

Mr Africa indicated the principles for acccelerating LED implementation and noted that DCoG served as the single window of coordination for LED (see presentation attached). It had to create functional partnerships between municipalities and the local private sector as well as civil society. Local investment opportunities of scale had to be unlocked that would lead to sustainable private sector job creation. Local procurement also had to be leveraged. The availability of economic infrastructure at a local level, the reduction of red tape and skills development were further key elements for the future success of LED.

In their turnaround strategy, the DCoG had committed themselves to job creation and to further this objective they had facilitated the establishment of three Advisory Councils. They had set a target of 10 for the establishment and support of Catalytic Business Ventures (CBV's) and had realised four to date. The July 2011 Cabinet Lekgotla Resolution endorsed the establishment of Business Development Forums in every district and the development of three CBV's per district.  Partnerships were central in this and they had focused on matters of process with stakeholders in different parts of the country. A request for funding had been prepared for submission to the Development Bank of Southern Africa (DBSA) Jobs Fund and they were also partnering with international development agencies. Municipalities were also required to have a local and economic plan as part of their Integrated Development Plans (IDPs).

Mr Africa noted that DCoG's Cooperatives Development and Support Programme was an important flagship programme in terms of Outcome Nine and the Local Government Turnaround Strategy. They had committed themselves to facilitate the implementation of ward-based economic planning and that they had gone further by stating that each ward should have at least one economic development product. This was to enhance the municipal contribution to job creation and sustainable livelihoods through LED. The objective was that 30% of work opportunities created through the Community Work Programme (CPW) should be linked to functional cooperatives by 2014. This ward-based programme was driven by the objectives of economic empowerment, inclusivity, social mobilisation, partnerships, and participation of the poor, underprivileged and unemployed.

Mr Africa stated that DCoG had been working with the South African National Apex Cooperative (SANACO), a registered apex co-operative in terms of the Co-operatives Act of 2005 and they were also a member of NEDLAC, representing all co-operatives. They provided services on behalf of the Department such as social mobilisation, facilitation of training and access to finance. DCoG had supported 520 cooperatives to date and 4 480 job opportunities had been created.

Mr Smith asked why the Department still bothered with LED and questioned the focus on LED when there were so few concrete outcomes. It was one of the areas where it was extremely difficult for the Department and the committee to deal with, as the expectation was that if there was a policy intervention, there would be a positive outcome.The Department had spoken about job creation through cooperatives but the number of jobs created was irrelevant in the broader scheme of things. Instead of economic opportunities being responded to by entrepreneurs, there were bureaucrats who made decisions on what was needed like chicken farms or curio stalls for tourists along the national roads. He was not suprised at the lack of success that could be observed year after year. He questioned whether the Turnaround Strategy and new approach to LED would attract big business underetakings and produce the desired outcomes. He endorsed large scale farming but found it discouraging that subsistence agriculture, which was prevalent in the rural areas 20 years ago, was no longer taking place and that people were no longer growing food for themselves. He acknowledged that there should be LED policy but it had to be relooked at. While the Department had advocated good governance, and cutting red tape, rates rebates and tax advantages had not been mentioned. He was disappointed in the LED strategies of the past 15 years which he thought had been a complete waste of time in many ways.

The Chairperson proposed that the committee reconsider  LED and come up with recommendations on its implementation when they discussed their strategic plan.

Mr Lorimer stated that he shared Mr Smith's sceptism about the possibility of government creating business as it was not what they could do. The best contribution that municipal government could do for job creation was to do what they had to do and get out of the way and if there were opportunities for business, it would come. He asked if he could be given some examples of cooperatives that were actually working and how big they were and what they did.

Mr Lorimer asked for clarity on the interface between cooperatives and the CWP. Were CWP money and jobs allocated to certain CWPs, who made decisions and what were the processes followed.

Mr M Nonkonyane (ANC) congratulated the Minister on his deployment and commended his commitment to achieving concrete results.  He felt that LED was necessary in rural areas even if it was not needed in urban areas as the previous speakers had alluded. Best practices were needed to make LED work. The committee knew what was happening on the ground because of their oversight role. He noted the DG's statement that LED had an urban bias since its inception and he found it unacceptable that rural areas had  been neglected and that basic services were lacking. They had spoken about an integrated and sustainable rural development strategy and LED was key. Some municipalities were not taking LED seriously and even when money was allocated they did nothing. There was also no mention from the Department of a key stakeholder in LED i.e. the traditional leadership. The Department had to coordinate all the government programmes in terms of the Intergovernmental Relations Framework Act. The Department had to clarify what  LED had done and if it had delivered what was expected, especially in rural areas. He raised further questions, specifically about communal land and its implications for development.

Nkosi Mandela wanted clarity on what was meant by the Department's statement that each ward had to have at least one economic product. He asked whether the DCoG was engaging with other departments on what they were doing. The Department of Rural Development and Land Reform had undertaken a case study in Malawi where they saw an impressive programme called 'one village, one product'  where communities were able to produce products which the government in turn was bought. What was being done to empower local municiplalities? There were programmes that the Department of Rural Development and Land Reform were implementing in this sphere and they were looking to empower certain communities. How was the DCoG corroborating with other Departments to ensure that LED was more effective?

The Chairperson added to the queries raised on intergovernmental relations and working relationship with other departments doing the same work. She commented that recently the Deputy Minister of  the Department of Trade and Industry (DTI), Elizabeth Thabethe, distributed funds to cooperatives in the seven municipalities in her district. She asked if DCoG had any working relationship with her as it was important to know that there was no duplication and that resources were evenly distributed.

Ms Nelson was concerned that there had been many LED strategies and that a lot of money had been poured into projects and that many of the projects were not sustainable. What was different this time?  Municipalities and development agencies were receiving huge amounts of money but there was nothing to show for it. She noted that there had been a project in which almost a million rand had been invested in the manufacture of overalls and school uniforms. The municipality. which needed overalls for their workers and who had initiated the project, did not utilise the project to source their protective clothing and eventually the project folded. They were talking cooperative governance but where was the synergy?  They had invested a huge amount of money and it could have benefited all the municipalities in the district. Was industry and in particularly manufacturing industries not what they were looking at in the country?

Ms Segale-Diswai reiterated the question on what was going to be done differently in terms of the new approach to LED as the committee had heard the same things before. She asked how the Department monitored and evaluated the projects and how sustainable were they. She asked what they meant when they said they were going to reduce red-tape. She noted the numbers indicated for the job opportunities that had been created and queried what types of jobs they were and how sustainable they were. If jobs were created for a period of three months, what happened after that?

Ms Wenger refered to the the fact that DCoG had reported that very few lasting partnerships had been created between the private sector and municipalities and other stakeholders and they had admitted that the LED system had largely failed to achieve what it was intended to do. What was the Department and municipalities doing to protect the existing projects? She noted that when big enterprises and large shopping centres came into small towns, small business in the central business districts (CBD) were no longer sustainable.The availability of economic infrastructure at local level was also a problem as the costs of infrastructure was enormous. The actual progress in terms of the targets the Department had set, was also very low with only three out of 10 being achieved. She noted the example of the municipality not supporting an LED project as mentioned by Ms Nelson and said they should look at the Municipal Finance Management Act (MFMA). Businesses should have the relevant clearances and documentations to enable them to be sourced.

Mr J Matshoba (ANC) asked when Municipalities were going to stop the practice of outsourcing as they were supposed to be creating jobs. He also questioned the short period of time people were employed in the CWP and the low remuneration they received.

Mr Ricardo Hansby, Deputy Director General, DCoG, responded to the question on why the Department still bothered with LED and said that they recognised that viable municipalities came from vibrant local economies. In South Africa because of the structural nature of the unemployment and inequality problems one could not leave municipalities at that level to their own devices as many had failed and imploded. They had to work on long term strategies and the fact was that South Africa had many economic opportunities that were not being exploited. They had to start with the basics which was that the private sector had a role to play within particular economic spaces where there were specific opportunities. The country was replete with economic opportunities and municipalities had to create the space for the private sector to play their role to develop these opportunities. They could however, not leave that process to the market on their own and the failure of economic policy had been that they had relied on economic assumptions such as if one changed the exchange rate or interest rates, things would change. In South Africa this had not happened and they had to literally tell the private sector where the economic opportunities were locally and ask them to develop it. They were not saying that municiplities had to develop the opportunities and neither to identify them and it had been a mistake for them as officials to identify the opportunities and to want to develop them. The private sector had a balance sheet in terms of access to markets, skills, management expertise, technologies and equipment to develop opportunities.

The Department was also saying that they had an economic system that was working very well in some respects, they had farms, shopping centres, mines, agri-businesses and other enterprises that had been identified in the new growth path and the industrial policy action plan but they needed more of those. They had to use what they had to create more and this was the principle on which LED was based and that was what was different in the new approach. What had happened in the past was that there had been a language barrier between the municipalities and the private sector and the Department had realised that they had to facilitate these partnership at the local level. The private sector together with the municipalities, could unlock economic opportunities to the benefit of communities. Communities were not excluded and they noted the committee's point that small business should not be excluded. A fine balance had to be found and they had to integrate the value chains of big and small business so that there was an economic balance at the local level and at the higher levels of employment creation.

Mr Hansby agreed that more large scale farming was needed and he noted that the number of farmers had decreased over past years. Higher levels of agricultural output was needed in order to sustain the country's food security and agriculture also had to be developed as a labour intensive sector. There was also the rest of the value chain in the agricultural sector that would yield opportunities that needed to be taken up by the private sector.

On the issues raised about cooperatives, Mr Hansby responded that the number of job opportunities the DCoG had spoken about, was not actual jobs but job opportunities that resulted from the Department's intervention through SANACO. Those cooperatives had been supported by SANACO and as a result certain opportunities were identified. Some of the opportunities had been filled and others not and they were saying that there was scope for increasing activity at that level. However, he indicated that the Department had yet to audit and verify those figures. Their approach was to go to grassroots level and to test what was there and they would not be sitting idly in their offices in Pretoria and assume that things were functioning at that level. As a department, the Minister had given a clear injunction that they needed to be out there to ensure that delivery was actually taking place.

Mr Hansby responded to the issues on the failure of LED in South Africa and said there were a few basic reasons for this. Firstly, the focus of LED had been on communities. Unfortunately, communities did not have much to bring to the table for their own development and that was why they needed the private sector. Another factor was the size and nature of projects and most of them had been unsustainable. He used the example of Genadendal in the Western Cape where a lot of donor funding went into small projects. Although millions went into projects, there was little to show for it. The management structure of the projects was not business-like and there were petty squables over positions which made the management unviable. The Department was saying that they had to induce business principles into projects to give it sustainability. That was also one of the differences in the new approach as they were promoting sustainable businesses as opposed to welfare type projects that required funding every year as had been the case in many National Development Projects (NDA). When it came to skills for LED, many of their colleagues at the local level did not have the requisite skills to drive LED and they did not understand business. There was a need to bring in skilled facilitators with business development skills to structure business and to bring in the private sector.

Mr Hansby responded to the issues raised by Nkosi Mandela on the role of traditional leadership in LED. He noted that the Royal Bafokeng was a good example where they had been able to turn the competitive advantage of the area into a huge enterprise that benefited their people. He commented that the Minister had raised this issue with the Department of how to equip traditional leaders so that they were able to engage with potential business partners to unlock opportunities in mining, agriculture and commerce in their local areas. Many municipalities had also decided to be the tourist capital or Information and Communication Technology Hub but they did not have the competitive advantage, and that was also a reason for the failure of LED. The Department wanted to bring them back to the basics of what their initial endowment was.

Mr Hansby elaborated on the linkages with other departments and how they were working with them. He noted that it was a new initiative and that was why the performance rate and targets were very low. Together with other departments, they needed to scale the partnerships up between municipalities and the private sector. Cabinet had instructed them to do this throughout the country as they could see the merits in the concept of bringing the private sector and local government together with support from national and provincial government on intergovernmental level. They were working together in the cluster formations, they were engaging with the DTI, The Department of Economic Development and others. In terms of cooperatives specifically, they envisaged signing a Memorandum of Understanding with the DTI on measures to support cooperatives that had been identified by DCoG.     
While the Department saw itself as the single window of coordination for LED but they did not want to work in isolation as they could not do it on their own.
Mr Hansby noted the concerns raised by members about infrastructure and said they would take it into consideration going forward.

Mr Baloyi responded to the issues raised about the LED policy and whether LED had failed. He agreed with Mr Nonkonyane that the LED policy was needed. It was a generic administrative function to have policy as it defined what needed to be done. If there was no policy how were they going to be accountable? There would be also different accountability instruments if there was no policy. The Department would be held accountable in terms of what they said and what they delivered in terms of the policy. There were municipalities who were self-sourcing and strong but this was not the case for all municipalities. In situations where municipalities were not at the same developmental level there was the possibility of  promoting development based on the premise of 'from each according to their capability and to each according to their need'. Mr Baloyi noted that the Department would have a portfolio strategic planning session. This would take place before the Committee's own strategic planning session and they would present their plans to the committee before then. There were issues that the Department would engage in, including whether LED had failed. He noted that Mr Hansby had acknowledged its failure to some extent, but he was not convinced. They would consider all the facts before coming to conclusions and report back to the committee. This would be done openly and transparently and he would 'walk the talk' in terms of their findings.

Mr Baloyi responded to the questions raised about the Integrated Rural Development Strategy and noted that CoGTA had a critical role to play. He noted that the Communal Land Rights Act (CLaRA) and the Development Facilitation Act (DFA) were key pieces of legislation for the integrated rural development strategy. He had enquired about where the Department was in terms of the legislation when he had taken office, but had been told that it was not their responsibility. He was emphatic that this could not be the case as the Department had a direct interest in the legislation and the Department was taking this up with the Department of Rural Development and Land Reform.

The Chairperson noted that the committee had also assisted with the ClaRA legislation.

Mr Baloyi said they would pursue the matter further. He noted the concerns expressed about the fact that traditional leadership was not mentioned in the presentation. This happeened by accident as presentations were a summary and it could not be questioned that there was a role in LED for traditional leaders. Before he had met with the National House of Traditional Leaders, he had been told that the traditional leaders felt that they were only invited to give a blessing or make closing remarks on devlopmental projects like the LED and even IDP's and that they were ignored when it came to the serious business. After they met, it was agreed that they were going to have a session with not only the House but also the amakosi to address the seven issues which had been identified. One of these issues was to formalise the engagement with the Minister and traditional leaders.

Mr Baloyi responded to the issues of local procurement for empowerment and noted that in 2000 the government had passed the Preferential Procurement Policy Framework Act (PPPFA). The intention was to achieve what members had raised and its application had to be improved in practice.

Mr Baloyi noted that there had been concerns about projects not being sustainable and indicated what would be done differently. He stated that when the Department made presentations, they had to be focused and progress based. They should be able to indicate the progress that had been made since the inception of LED and provide an inception to date performance analysis. The performance in the current year had to be reflected under the year to date progress. A breakdown per province was also necessary and if possible a breakdown per district so that it was evident if LED was only happening in some areas. Specific detail was also required in the case of traditional authorities. The Department would do things differently by not being theoretical and the information they provided would be practical and succinct.

Mr Baloyi addressed the issue of outsourcing and alluded to South Africa being a developmental state that was hands-on, interventionist and pro-poor as seen in the CWP and the Extended Public Works Programme (EPWP). One could question where outsourcing found expression in this context and he noted that this was an issue that had to be addressed.  The Department would be doing a presentation on CWP and this would explain the difference between CWP and EPWP and his understanding was that CWPs were not there to compete for opportunities but to facilitate service delivery.

Mr Lorimer reiterated his request for examples of cooperatives that were working and his query on the interface between cooperatives and CWP. He commented that there was the perception that government would intervene and that they would always intervene in a positive way and make things better but sometimes government was the problem. An example was the the successful use of their platinum mineral rights by the Royal Bafokeng. There were other traditional communities in the North West Province who were not managing to get any significant benefit out of their traditional mineral rights because of interference by the Provincial Government and CoGTA officials and he suspected that it was probably corrupt interference. He felt they should start there and get government out of the way.

Mr Nonkonyane thanked the Department and particularly the Minister for his response but said that there was one thing which had to be reiterated and that was the need to harness all the structures of government on development. He was concerned about the statements of the DDG on the failure of LED. They had to redouble their efforts on economic development and this was something that all South Africans had to do as development had to be people driven. There were challenges and he appreciated the Department being honest about this and he appealed for a renewed commitment to LED when they presented their strategic plan to the committee.

Mr Smith clarified that he had posed a rhetorical question when he asked why they still bothered about LED. The product of 15 years of endeavours had been failure and policy was desirable if it delivered. He was pleased with what was being said as the notion that projects equalled economic development had been a failure. Being project based was a failure as projects were a waste of time. What was needed was viable businesses that employed people. If the focus was on business development and unlocking economic opportunities through local business, then it would be commendable. Having the Department identifying projects, money, and people and hoping it would work was a recipe for failure. 

Mr Smith raised the issue of subsistence agriculture and asked if there were any incentives for this. He noted that the Department had been very hostile in the past when municiplalities wanted to offer rates rebates to encourage local business development. Was this still the case?

The Chairperson noted that Mr Baloyi had emphasised the necessity for the Department to provide a breakdown for figures in presentations in the future. She suggested that members monitor projects in their constituencies and hold the Department accountable if the progress the Department reported was inconsistent with what they had observed.

The Chairperson refered to Mr Baloyi's statements on the formalised engagement with the House of Traditional Leaders and noted that the committee had met with them recently on their Annual Report. They had raised the issue that the committee was not engaging with them. The committee had identified the need to interact with them through a parliamentary liaison person and she asked the DG to take it further.

Mr Baloyi noted that if there were CoGTA officials who were blocking traditional communities from uplifting their status or other issues, he needed to know. CoGTA was not only about municipalities but it involved  Chapter Three of the Constitution which dealt with Cooperative Governance which embraced national, provincial and local government. If there were provincially based CoGTA officials who were a stumbling block to traditional communities, they needed to be informed so that the situation could be managed. 

Mr Baloyi agreed with Mr Nonkonyane that a perception had been created by the Department that LED had failed and said there should be factual evidence before drawing conclusions. At their strategic planning session the evidence would be advanced to him as the new Minister and he cautioned against drawing simple conclusions beforehand.

Mr Baloyi addressed the issue of identifying projects and public participation. He noted that when IDPs were developed, the process was not supposed to be a consultancy driven undertaking. It was supposed to be a participative process and the people of the community had to meet and identify projects. If they identified projects and if the projects came in as part of the LED deliverables, so be it. Identifying projects might not necessarily be a recipe for failure as had been alluded to earlier.

Mr Baloyi addressed the issue raised by Nkosi Mandela about the Fora convened by the previous Minister where the deemed and current Kings were hosted together and said it was a factor of reality where the rule of law prevailed. There were these two statuses because of the existing processes. As part of his process of consultation, he wanted to meet the amakosi and the Kings. He did not want to be seen to be violating protocol and had asked them to define the order of his visits. He would also see that an invitation was extended to the committee.

Mr Baloyi noted that the presentations made to the committee would be different in future and they would not load them with documents that were distributed at the meeting. They would provide a slide presentation and a narrative summary that would include a breakdown of figures. Everything that was submitted would go through his hands to see if they met the committee's expectations as that was accountabilty and not micro-management. He invited the committee to engage with him on relevant issues when necessary and not only at the scheduled committee meetings.

Mr Hansby responded to the request for examples of successful cooperatives and said there were quite a number of new ones and in the history of co-ops in the country. In Ba-Phalaborwa, there were a number of cooperatives and there was a bricklaying Cooperative supported by the Municipality and the municipality was also buying the bricks. It was also supported by the DBSA and the Department through cooperation agreements with the Italian Technical Assistance Agency in South Africa. There were the old agricultural co-ops which existed throughout the country and there were also arts and crafts co-ops in Mpumalanga, the Eastern Cape and throughout the country. Mr Hansby offered to make a more detailed list with contact details and he would also try to find a few that could be used as best practice.

Mr Hansby responded to the questions on incentives and said it was dependent on the abilility of a local municipality to make incentives available as it could be quite costly to lure investors. They did not want municipalities to trade-off its financial viability just to attract one investor who was not going to add long term sustainable value.

Mr Hansby noted that if LED had failed, then the economy had failed and that was not what they were saying. They were just pointing out the challenges over the years and they were not departing from it. LED was indeed, necessary and it was alive and active and they were trying to strengthen and consolidate it around the country.

 Anti-Corruption Inpectorate
Mr Africa defined the Anti-Corruption Inspectorate and outlined how it was constituted, its mandate and the cases it had investigated thus far (see presentation attached). it was constituted as a Chief Directorate in the Department and it had a close working relationship with the law enforcement agencies such as the Special Investigations Unit(SIU) and the Hawks. However, it did not have a distinct legal status. It was strategically located in the Department and the Inspectorate reported directly to the the Accounting Officer, the DG. Its mandate was derived from the Ministry and the Department and it conducted preliminary investigations on cases received. It had been established in February 2011 and the unit was headed by an Executive Manager. There were two Senior Managers responsible for investigations and three other members who were responsible for ethics, training and advocacy. Mr Africa introduced the Executive Manager and Senior officials who were present.

The Mandate of the Inspectorate was to prevent, combat and investigate reported incidents of corruption occurring in municipalities throughout the country. The Department saw it as their obligation to support municipalities in tackling corruption and in developing anti-corruption and anti-fraud plans. Their mandate also included the promotion of the Codes of Conduct for Councillors and officials as outlined in the Municipal Sytems Act of 2000. Specifically the Act made provision for the Minister of Cooperative Governance and Traditional Affairs to conduct an investigation where an MEC failed to conduct an investigation within 90 days, notwithstanding a request from the Minister to do so in terms of the Act.

Mr Africa indicated that there were cases where they were dealing directly with provinces and they had concluded one case to date and one was in progress. They had received a number of hotline cases refered to them by the Public Service Commission of which 10 had been concluded and 241 were still in progress. They had received 57 cases from the Presidential Hotline of which 7 had been concluded and 50 were in progress. Mr Africa indicated that he had given an overview and they were prepared to come back and reflect more substantively on the work of the Inspectorate.

Mr Baloyi asked if there was a profile of the concluded cases.

Mr Africa confirmed with the Executive Manager that it had not been included and apologised for the oversight

Mr Baloyi noted that the apology was not acceptable and that the committee would be provided with the information. He felt that it might be necessary to redo the presentation given the seriousness of the work of the inspectorate and because vague generalisations were not appropriate for the committee to engage with.

The chairperson agreed that the committee should wait for a full presentation which had more detail and gave a breakdown of the figures for the muncipalities in each provinces, before they engaged in any discussion. She noted that she had recently made a declaration in the House on behalf of the Department on the fight against corruption and the figures were inaccurate. She noted that the BRR Report recommended that the committee receive quarterly reports from the Department so that they were informed on progress made. She also asked them to report on why there were 25 municipalities under investigation in the North West Province.

Mr Nonkonyane said he understood that the documentation was incomplete and proposed that the presentation be given on another occasion and that the meeting be adjourned.

Ms Nelson said that the matters the Chairperson had raised were also reflected in the BRR Report. There had been many forensic audits around the country but they never saw the outcomes and that was the information the committee wanted to see.

The Chairperson noted that the committee would need discussion documents from the Department seven days before the strategic planning session in order for them to scrutinise it beforehand. As part of their strategic plan, the committee would nominate a member to monitor each and every programme and also someone who would liaise with the Department on any problems they might have. In the BRR report they had highlighted targets that had been partially achieved by the Department and they wanted feedback on this as had been indicated in their recommendations.

Mr Baloyi noted that there were four parliamentary liaison officers for the Department and that they should be at Parliament.

The Meeting was adjourned. 


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