Municipal Infrastructure Grant (MIG) review & underutilization of 15% MIG for sport and recreation: Department of Cooperative Governance briefing

Meeting report

Mr Muthotho Sigidi, Deputy Director General (DDG): Government and Intergovernmental Relations, COGTA, presented, noting the following:
 

Important amenities under the P-Component of the MIG
- The SRSA has raised a concern that municipalities are not prioritising sport & recreation facilities
- During the 2010/11 financial year the decision was taken by the Appropriations Committee that the total P-component (15% of the MIG) be ring-fenced in future for the development for sport and recreational facilities by municipalities.
- Prior to this decision bilaterals between the two departments had resolved that only 5% of the MIG will be ring-fenced for sport and recreation and the remainder 10% be ring-fenced for other amenities such as ECD facilities (33% of the P-Component)
- A  table was provided that  explains:
Sport & recreation will have a share of 5% from the total MIG allocation as opposed to 3% share before the consolidation of the grants in 2004. (The remaining 67% of the P-component would therefore be available for other municipal public facilities)
- Ring-fencing doesn’t necessarily mean that municipalities are compelled to spend the funds as per the provision of formula components and municipalities are still required to engage communities before projects are identified and implemented.
Active participation of the relevant sector departments during early stages of IDP processes is very crucial.

Analysis
- A total amount of R1,414 billion was spent the last three years on sport and recreation facilities which is 3% of the total MIG over the last three years.
- From the above the investment in sport and recreation facilities development (new/ rehabilitation or upgrading) municipalities in Free State and Western Cape provinces have invested 14% and 10% respectively over 2012/13 – 2014/15.
- In the Eastern Cape, KwaZulu-Natal, Limpopo provinces the bulk of the MIG funding is allocated to district municipalities (Water Service Authorities) to implement water and sanitation priorities only (MIG funding follows functions).
- The main reasons for the low levels of investment are:
▪ Although norms and standards have been developed by the SRSA, individual municipalities do not know the sport and recreation targets to be achieved
▪ Low levels of prioritisation by municipalities on the development of sport and recreation facilities. Municipalities rather spend MIG funding on other priorities (other public amenities)
▪  There are human resources constraints at National, Provincial and Local Government Levels in terms of monitoring and support, the management of sport and recreation responsibilities as well as for implementation sports development programmes

Proposals
1.         Improving the prioritisation of the development of sports and recreation by municipalities
- Setting of local targets to be achieved over time by DRSA informed by norms and standards
- Guiding municipalities on how the targets must be achieved using grant funding
- SRSA must lead an audit of sport and recreation facilities per district, local municipality and/or ward level in order to determine the needs as well as the state of facilities.
- Projects would be prioritized on the basis of the provincial plans which integrate other provincial plans of other sectors such as education and health.
- This would give effect to municipal facilities plans and would clearly indicate the facilities to be rehabilitated and new facilities required and inform the municipal IDP, planning and budget processes.
2.         Improving institutional arrangements
SRSA and its provincial counterparts to be in a position to monitor if municipalities are meeting all the norms and standards regarding the development of sport and recreation facilities
Improving to ability by National to define the needs of the municipality as per sector norms and standards
Upscaling the capacity of the sector and its provinces to ensure compliance monitoring and oversight
Dedicated staff component to deal with the development of sport and recreation
3.         Strengthening the participation of DSRA in the MIG planning sessions
- Annual planning sessions with receiving MIG municipalities are held and are aimed at trying to influence the municipal MIG implementation plans before they are finalised for implementation by 1 July each year (start of municipal financial year)
- It should be noted that it is still important for sectors to engage municipalities to identify needs and participate in the IDP processes
- Important to upscale the role played by the sector in the relevant business process of the MIG including site visits and project appraisals.
4.         National Coordination and monitoring
- Importance of co-ordinating government activities with the objective of creating a common approach to service delivery challenges facing government has become extremely important.
- The establishment of Inter-Ministerial Task Team (IMTT) on service delivery will assist with the coordination of service delivery initiatives and sport and recreation matters as part of the agenda for the IMTT.

MIG policy review response:
- Make allowance of use of MIG for renewal more explicit - Renewal must take place within a context of proper infrastructure management, including adequate maintenance
- Allow municipalities to spend up to 5% of their MIG allocation on repairs and maintenance
- Allow use of MIG for economic infrastructure - also be used for infrastructure that unlocks economic growth or catalyses revenue generation.
- Infrastructure grants should only be applied in situations where the necessary operating and maintenance arrangements associated with infrastructure are in place or can reasonably be put in place within the medium term
- Infrastructure Investment is subject to Infrastructure Investment Plan (IIP) to be in place
- Introduce two MIG ‘streams
- MIG-1 is current MIG
- MIG-2 has less conditionality and is monitored based on overall capital programme and achievement of agreed outputs, rather than on a project-by-project basis
- Rural roads focus in Priority Districts - Allow municipalities qualifying for N funding window in MIG to use up to their full N allocation for rural roads
- Use the M window in the formula to offer incentives for strong performance
- A top-slice of MIG for ‘Regionally Strategic Municipal Infrastructure
- Improved coordination of MIG across spheres
▪ Reintroduce coordinating structures
▪ Improved national sector policies on basic services
▪ Active engagement by sector departments in planning and budgeting processes of target municipalities (MTSF approach)
▪ Improved sector monitoring of relevant norms and standards
- Monitoring and evaluation
▪ Increased focus on monitoring performance as well as compliance
▪ Takes place at programme level, municipal level and project level (MIG-1 stream only)

Recommendations
- Re-determine the current 15% (P-Component) of the MIG to allow for development of other public facilities to be funded from MIG as part of the 2016 Division of Revenue Act and MIG Framework processes;
- Municipalities are made aware of their roles and responsibilities on sports and recreation facilities i.e. MIG allocation letters as well as SRSA, DCoG and its provincial counterparts conduct workshops and meetings with municipalities to advocate for sports and recreation;
- SRSA with their appropriate analysis inform municipal IDP processes through sport and recreation sector plans on targets; and
- SRSA and its regional counterparts to improve their participation in MIG planning processes and business processes and procedures (project appraisal and site visits);
- SRSA monitor the implementation as there are even cases whereby sport and recreation facilities would be included in the IDP, registered with DCoG however not implemented.
 

Discussion
The Chairperson noted that the presentation on the Municipal Infrastructure Grant (MIG) utilization and impact of underutilization of the 15% MIG for sport and recreation had been a long awaited briefing. More so because the Committee was returning from oversight visits where its resolve to have the MIG return to the administration of SRSA had been re-emphasised by what the Committee had seen.

Mr D Bergman (DA) noted that from the Committee’s oversight, it had found capital expenditure that was not in line with operational expenditure. One found that a newly donated netball court would be growing grass and be in general disrepair three years from its establishment. As an analogy he said that during his councillor days there had been a community that had wanted to vandalize a multipurpose centre as it was not benefiting them at the time. The council had then introduced different functions in the centre to benefit the community. If there was a multipurpose centre with a multipurpose court that could double up as a health, education and social facility the personnel could be shared amongst those departments at a municipal level to reduce the cost of labour. It was important for the Committee to play a joint oversight role with COGTA on the use of the MIG when COGTA was deliberating during the planning stages of the sports sector MIG expenditure. He was also in support of the proposal that SRSA had to undertake a complete facilities audit from ward level in municipalities. The responsibility of that audit of course had to fall within the municipalities’ ambit, so that it would have that information already so as to facilitate better planning around MIG expenditure.

A major challenge to the Committee's work on MIG use was that it relied on the South African Local Government Association (SALGA). Whenever it did oversight, the Committee found the opposite to what SALGA had reported on. Therefore the Committee had to find a direct line of communicating with municipalities as SALGA was letting the Committee down.

Government also had to relook how it applied incentives and penalties for work done because looking at Mpumalanga and the Northern Cape, communities in those provinces were the most in need of basic sporting facilities yet these provinces were the ones with the most redirected expenditure of the MIG allocations. Government should not penalise the provinces at the expense of the communities. Therefore COGTA and SRSA should instead supervise the administration of the MIG as a penalty for how the two provinces were currently misusing that grant.

Mr S Malatsi (DA) said that the misuse and underuse of the MIG at municipal level was a broader reflection of the capacity levels there though redirecting resources seemed to be the easiest thing. Seeing that there were various stakeholders involved in the use of the MIG from national to local government; what interventions had COGTA initiated to ensure compliance with the spending requirements when it became apparent that there was insufficient spending? He noted that the acknowledgement that there was no appetite to spend on Sports and Recreation (S and R) was very late. Another area of dispute between municipalities and communities that did not receive much consideration was the location of facilities, especially when dealing with the underuse of said facilities.

Ms B Abrahams (ANC) asked how community participation could be made better so that communities participated more constructively in Integrated Development Plans (IDPs). What alternative means could be employed to complete the facilities audit if the complaint was that there were too many to count? How did COGTA deal with municipalities asking for more MIG when they could not account for previous MIG expenditure? Considering the Expenditure on Projects between Gauteng and the Free State, what range of project types had been undertaken in the two provinces?

Ms B Dlomo (ANC) was concerned about the report that there was lack of participation from SRSA in the pre-implementation phase of projects that COGTA did by supporting and guiding municipalities in meeting the objectives of the MIG programme. In that regard she supported the proposal of an all sector workshop that would coordinate the overall use of the MIG. She also supported Mr Bergman’s conceptualization of how community beneficiation could be achieved by delivering different government functions with shared resources in multipurpose centres. Could COGTA speak on schools sport as well?

Mr G Mmusi (ANC) asked who was responsible for ensuring that sector departments were established in municipalities. He was surprised to hear that a municipality would have challenges in terms of which facility should it rehabilitate or where it should locate a new facility as that would seem to be a dereliction of duty. He was also witness to several cases where a ward councillor was mandated by a community to speak to specific issues challenging the community; yet the councillor would change his mandate once at council. Could COGTA speak to that phenomenon? What was COGTA's intervention when it discovered that there was no planning for MIG use or, after planning, there were implementation shortcomings? Could COGTA give the Global Positioning System (GPS) coordinates of the unused facilities which it had found to be in disrepair for purposes of Committee oversight? Could it clarify what MIG-2 was? What interventions had COGTA put in place in the rural municipalities it had found to not be spending on S and R?

Ms D Manana (ANC) said she had seen nothing written about S and R in COGTA's Back to Basics (B2B) themed document. She asked how often COGTA met with SRSA to monitor the implementation of the proposals it had presented to the Committee? Had COGTA allocated funding for SRSA to complete its facilities audit? What progress had been made between COGTA and SRSA in terms of returning the 15% MIG back to the administration of SRSA?

Mr S Ralegoma (ANC) said that the Committee would have to focus on pushing SRSA and COGTA to complete its facilities audit. Additionally, government would have to ensure more rigorous participation by sporting bodies in the IDP process. Could COGTA clarify whether the 15% MIG was ring fenced for S and R in particular? Could it also speak to the Urban Settlements Development Grant (USDG)?

The Chairperson was surprised to hear that SRSA was not participating in multi-sectoral discussions with COGTA and other stakeholders. Challenges with SALGA were that possibly its role needed to be redefined so that its work could have more impact. She then asked the National Treasury representative present at the meeting what Treasury did if it discovered that monies meant for particular services had been redirected to other priorities? Government had to realise more quickly when there was misuse of grants as it was just taking too long to correct maladministration.

Response
Mr Werner Heydenreich, COGTA Senior Manager: Municipal Infrastructure Policy, said that both Free State and Gauteng had addressed many of their water and sanitation (W&S) project backlogs. From COGTA's analysis the communities in those provinces would now focus on prioritising road works. In both instances the district municipalities were not water services authorities meaning that all that MIG allocation went to local municipalities which spoke to the fact as to whom prioritised the projects down there. The projects were predominantly road works followed by W&S services. Additionally the Committee had to recall that the MIG also supported the Greenfield housing development programmes which were emerging in Gauteng already.

The USDG was administered by the Department of Human Settlements (DHS) but possibly when the metros submitted a programme of multiple projects to the DHS, sports and recreation should have been articulated in those programmes. Over and above that, the MIG was based on individual projects.

Mr Sigidi agreed with Mr Bergman’s conceptualization of making effective use of multipurpose centres. The amenities under the p-component of the MIG included Thusong service centres where Mr Bergman’s conceptualization was already taking place. Moreover the management of such centres was initially envisaged to be a municipal responsibility so that the maintenance of the infrastructure would also lie with the municipality. 

On penalties and incentives; there were challenges there as the MIG was not a quick and effective tool in the manner that one said 75% should go to W&S. Not all municipalities would use the total 75% allocation for that purpose only, and as long as the money had been used to deal with backlogs in basic services that had been identified in a municipality, then one could not penalize that municipality. On the other components, since they were not as defined as the p-component, municipalities could do as they wished. COGTA had also realised that some municipalities were receiving less than R5 million and if that was a result of the DoRA formula, COGTA had approached Treasury to at least make R5 million the minimum and no less. SALGA was a voluntary organisation where if a municipality did not join SALGA, the Committee still had the responsibility to oversee the activities of such a municipality.

On municipal lack of capacity there needed to be honesty because that challenge was also at sector level. COGTA was simply saying that firstly, lack of capacity needed to be addressed at sector level so that when SRSA engaged with local government, municipalities could, in establishing their organograms, have officials focusing on sporting facilities. Those officials would then interact with SRSA on norms and standards and the kind of basic sports facilities required at local government level.

The only sector supporting municipalities in terms of its sector responsibilities as defined in the framework for DoRA that Mr Sigidi had evidence of was that of W&S. Yet even with W&S support, in the Nandoni Dam project, villages around the dam were reticulated only to discover during commissioning of the dam that polyvinyl chloride (PVC) pipes were used instead of steel pipes. That had caused a delay and that was why when looking at the Medium Term Strategic Framework (MTSF) Report in terms of Outcome 9, COGTA was saying that in terms of access to water the penetration was 94% but in terms of functionality it was 64%.

On sufficient spending there were no less that 15 grants going to municipalities direct and indirectly. The MIG was the best performing grant in terms of expenditure but the issue was whether the country was getting best value for its money. To get the value, the obligation was upon all contributing sectors to the MIG to define their individual norms and standards and to monitor them as well. An analogy was that COGTA's responsibility on pre-implementation was the registration of projects. However, it could not register sporting facilities if it did not have a technical report from SRSA because it was SRSA's responsibility to define and say that a particular facility which a municipality wanted built could be done, in terms of the norms and standards which SRSA would have defined. Therefore sector roles and responsibilities were covered in DoRA in terms of the framework put toward in that Act.

COGTA also required each sector to confirm its backlogs per area, per ward. As of that moment only W&S had defined its backlogs per ward per village in all 27 districts in the country. It was not only SRSA that had proposed to pull out of the MIG being administered by COGTA. The Departments of Environmental Affairs (DEA) and Social Development (DSD) had also made that call. As a coordinating department however, COGTA was still pleading with those departments to come into the process and to perform their roles and responsibilities in terms of DoRA.

The question of policy coherence rested with fact that if parliament had taken a decision on the 15% MIG for sport and recreation, Mr Sigidi had to implement that. But there was a MIG framework that did not define the 15%. The Standing Committee on Appropriations had defined 15% whereas Mpumalanga spoke about 100% going towards W&S. At COGTA national, Mr Sigidi was sitting now with three different policy intentions. Which superseded which? That was the complexity he had alluded to earlier where as an official he was pleading for policy coherence so that at implementation, he could be consistent about from which policy intention he would be working.

In terms of IDP participation, needs and necessities had to be balanced during consideration. Most of the time during the IDP process, communities raised a lot of needs but when one went to a municipality's budgeting one would find that there were 500 projects, whereas the budget could only cover 50. The 50 would then be put in the service delivery and budget implementation plan (SDBIP) of a particular municipality with the remaining projects captured in the IDP document. Policy incoherence came in when COGTA was told by communities that for the next five years the 500 projects were as prioritised. That IDP would be a credible document for a municipality as approved by COGTA. If then in the middle of that IDP there comes a decision by the Standing Committee on Appropriations that COGTA needs to ring fence the p-component for sporting facilities only. How then was COGTA supposed to balance those issues? Schools sport was outside the mandate of the MIG as Mr Sigidi believed it was to be partly funded by the Department of Basic Education (DBE).

He wondered whether in municipalities there should be sector department replicas? That was an issue he believed would be addressed as government standardized and institutionalized the organogram of a municipality: to either have sector department officials or units at district and local government. Moreover, the powers and functions of a municipality could give effect to such standardization.

On the issue of location of facilities, COGTA had a geographic information system (GIS) capacity where one system was the MIG-MIS system which was supposed to give a facility’s location. More important was how COGTA dealt with prioritization - which would not be originating not from how dominant a particular councillor was but instead informed by the needs of communities. COGTA certainly could indicate locations of facilities as and when the Committee required this for its oversight.

To add to the earlier explanation on difference between MIG and the USDG: Initially there had been a MIG-cities allocation which had subsequently transferred to DHS to form part of the USDG. In the grants review though, there was talk of integrating the USDG with the Human Settlements Development Grant (HSDG) so that DHS housing developments could be built with connector services without putting municipalities at a disadvantage.

B2B was a method of doing things where what COGTA had been talking on in terms of basic sporting facilities was a B2B themed approach. In the framework of B2B if a municipality was found to be working according to those principles, then COGTA viewed such a municipality as operating optimally.

COGTA had quarterly discussions with all the sectors that were contributing to the MIG to update each other and to find out how sectors felt about the progress. Regarding SRSA, Mr Sigidi had told the Director General of SRSA that he was finding it difficult that municipalities were not implementing the decision of the Appropriations Committee. He had then explained to the DG that initially the p-component had been meant for the amenities as reported in the presentation and not for sports and recreation only. If it happened that the original conceptualization of the p-component was returned to, the Committee would find that COGTA had appealed to Treasury that though SRSA had contributed only 3% to the MIG, it should be given 5%. That was an ongoing interaction between the DGs.

On the facilities audit, COGTA was referring to that exactly when speaking to roles and responsibilities because only after that audit could the backlogs be determined. Thus, when engaging municipalities COGTA could speak with something concrete in hand.

Mr Sigidi reiterated the Appropriations Committee decision in response to Mr Ralegoma’s question on whether there was ring fencing or not of the 15% MIG. He told the Committee that he had informed the Chairperson of the Appropriations Committee that that decision was wrong as the p-component had various sectors contributing to it. If that decision was implemented some of the contributors would want their percentage contributions back and as percentages were removed the p-component would gradually go back to only the 3% SRSA had contributed. The second challenge was that the decision was being introduced in the middle of an ongoing IDP. Ancillary to that would be that when Auditor General South Africa (AGSA) audited municipalities there would be disclaimers or qualified opinions as municipalities would have not used the 15% for facilities only. That would affect other state priorities negatively.

In terms of the Constitution, parliament could take the 3% contribution of the MIG back to SRSA but when a sporting facility was built there was no provincial capacity to maintain that facility. The municipality would also simply say that it was an unfunded mandate for it. SALGA would also then come in to ask why province was bringing in functions that were unfunded or underfunded.

Mr Thembekile Plaatjie, Parliamentary Liaison Officer, National Treasury, said that he was mainly there to hear where the Committee was so that he could relay the information to the relevant officials at Treasury.

The Chairperson said that what Mr Sigidi was saying did not include what decisions they had reached during sector discussions with contributing departments in the MIG. If there were capacity challenges that lead to implementation challenges those needed to be addressed speedily. She was still unclear about the p-component and how the 15% was being used.

Mr Malatsi said that he better understood the policy incoherencies which Mr Sigidi had alluded to after the discussion, but what did Mr Sigidi think could be done differently to simplify those complexities from all three spheres of Government.

Mr Ralegoma said that it was clear that there was a serious gap from the side of sporting federations as well since they always told the Committee that they had branches at ward level. Strangely there were no bodies that engaged in IDPs and it was their responsibility to make sport a priority at local government level.

Mr Sigidi said that the DoRA framework was quite clear in that it said ring fence the whole 15% for sport and recreation facilities and COGTA was only arguing the practicality of implementing that decision and not whether ring fencing had occurred or not.

What could be done differently was to improve firstly the level of engagement of various federations at a planning stage and to get them to understand how much had been allocated to municipality and what the 15% portion for sport and recreation was. At the level of SRSA, it was improving communication in terms of norms and standards for the various basic sporting facilities in a municipal space and to check whether the 15% would cater for those facilities since it did happen that in some instances a facility would require more than the 15%: for example a facility requiring R1.3 million where in fact the 15% in a particular municipality was R500 000. COGTA also needed to improve the sector engagements because in all Mr Sigidi had been involved in, he had not seen the level of participation that was required from some of the sectors. He had told the DG of Environmental Affairs (DEA) when he was inquiring on transfer stations and landfill sites that the DEA was not participating fully in meetings; how were municipalities supposed to know what the DEA required?

Mr Ralegoma said that Mr Sigidi had taken time to explain the ring-fenced 15% MIG as per the Appropriations Standing Committee decision in terms of policy. In reality he did not see any 15% for sport and recreation in the p-component as presented. In fact he saw 5% in the presentation and as per implementation constraints as also presented by Mr Sigidi. Could he speak to that?

The Chairperson said that she had understood Mr Sigidi to be saying the ring-fenced allocation of 15% was definitely there. The challenges were monitoring of implementation and policy incoherence. She then asked the Committee if it would not be wise for the Committee to be part of the forthcoming engagement between COGTA and SRSA?

Ms Manana agreed with Mr Ralegoma's comment about the p-component breakdown as presented to the Committee.

Mr Malatsi agreed that though it would be useful for the Committee to be part of the workshop between SRSA and COGTA, involving the Treasury in the workshop would also be worthy so as to cover engagements with all the stakeholders.

Mr Sigidi said that what he had presented to the Committee was a result of engagement with SRSA where COGTA had acceded that it realised that municipalities were not prioritising sporting facilities. Therefore it had proposed that the p-component split in the MIG which was approximately R7 billion in the Medium Term Expenditure Framework (MTEF) be done as presented in the PowerPoint. That included sporting facilities, community halls, Thusong service centres and cemeteries, but all of that had been before the Standing Committee on Appropriations decision. Before SRSA could respond to COGTA's proposal, the Appropriations Standing Committee decided on the 15% MIG ring-fencing for S and R facilities alone as Treasury wanted to approve the DoRA. Treasury approved the DoRA and the Appropriations Standing Committee called Mr Sigidi to find out how practical it was to implement its decision. He had explained the same implementation challenges to the Appropriations Standing Committee that COGTA had just presented to the Committee. The bigger challenge then was that the decision had already been approved and could only be reversed the following financial year and that was not done either. In conclusion what COGTA was saying was that municipalities were supposed to be using R7 billion in the current MTEF and not R2 billion as COGTA had proposed.

The Chairperson agreed that indeed there was an incoherence as Mr Sigidi had said and asked that the matter be parked there until the Committee had met with all the departments concerned. The briefings by COGTA, SRSA and Treasury would determine the need for workshop participation going forward.

Consideration of Committee minutes and matters arising from the minutes
The Committee adopted its minutes of the 23 June and 28 July without amendment.

The Committee Secretary reported on the progress of vetting interviewees for directors for the Safety at Sport and Recreation Events Act (SaSREA) panel.

Mr Bergman asked that the Committee do a follow-up on a matter where a member of the public had made presentations to the Committee regarding support for tennis development in Gugulethu, Cape Town when Tennis South Africa had been briefing the Committee on the affairs of tennis development in the country.

Mr Phumzi Mdekazi, Committee researcher, briefed the Committee on the progress made on the matter.

The Chairperson made a few more announcements and the meeting was adjourned.