Department Budget & Programmes 2003

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Cooperative Governance and Traditional Affairs

11 March 2003
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report


11 March 2003

Chairperson: Mr Y Carrim (ANC)

Documents handed out:
Department's Budget (link to Treasury website)
Organogram of Department's directorates
Institutional Reform and Support Branch presentation
Disaster Management presentation
Institutional Capacity Building and Support presentation
Performance Management, Equitable Share and Municipal Finance presentation (Appendix 1)
Auxiliary and Associated Services Programme presentation (Appendix 2)
Administration Programme presentation
Organisational Transformation presentation

The Department briefed the Committee on Auxiliary and Associated Services. The Committee raised several issues, including questions around the administration of the House of Traditional Leaders, the assessment of municipal demarcations and the South African Cities Network.

The Department briefed the Committee on Administration. The Committee considered corruption, citizen-friendly local government and staffing issues.

The presentations were focused on strengthening the institutions of provincial and local government as well as intergovernmental relations, through appropriate policy interventions. The following issues were raised during the course of the presentations: the need for an integrated approach by the department in order to improve capacity building for poor municipalities. Secondly, there was need for a strong intergovernmental relations between provincial departments and municipalities. The members of the committee also needed some clarity as to the department's projected outputs for 2003/04 financial year.

Institutional Reform and Support Branch
[This branch, headed by Deputy Director General Ms Jackie Manche, contains the directorates of: Disaster Management, Institutional Capacity Building and Support, Performance Management, Equitable Share and Municipal Finance].

Ms J Manche outlined the role of this branch, which was to ensure consistency in policy implementation. The theme for the 2003/04 financial year was to consolidate systems of local government in order to improve service delivery. The department was currently working on transitional legislation that would allow provinces to formulate their own legislation in that regard.

Mr Goosen (ANC) asked as to how the ITR's were connected and whether such institutions were not fragmenting the envisaged capacity building. He suggested that there was a need of an umbrella institution to monitor all the capacity building centres.

Mr Solo (ANC) was concerned that there was a slow progress in developing old municipal bylaws.

Mr Nobunga (ANC) raised some concerns with the purported integrated system in the local municipalities. He pointed out that one of the common problems currently faced by these uniformed municipalities was the inaccuracy in their billing systems. He wanted to know what kind of assistance was the department prepared to provide. Also nothing had been said in the budget about the "R293 Towns". What was on plan to help these towns?

The Chairperson commented that there was a need for a separate meeting to deliberate on infrastructure and free basic services during the course of 2003. He proposed that there was a need to bring all the programmes together to make use of limited personnel.

Ms Manche responding to the above questions, said that ordinances for each province had been finalised. She made reference to page 8 of the
Department's Budget and pointed out that different grants had been consolidated and would be subsumed under the equitable share. She also noted that in the next three years the department would consolidate the capacity grants with municipal grants and hence there was an attempt by the department to consolidate all capacity grants thus reducing administrative costs.

On the rollout of basic electricity, Ms Manche pointed out that the department had been working very closely with the Department on Mineral and Energy and that Eskom would be phased out of the distribution system.

Mr Kompela suggested there was a need for a meeting with the department on service delivery.

Mr Ngubeni (ANC) was concerned that poor municipalities like some in the North West were allocated smaller infrastructure grants. Such municipalities would never be viable as funding was more focused on the district municipalities.

Ms Manche replied that much money would be spent towards capacitating municipalities.

Disaster Management
Mr L Buys assessed past achievements and outlined the projected outputs and deliverables for the next three years for this programme (see document).

Ms Borman highlighted that there had been a reduction in the budget for disaster management. She asked the department to provide some clarify on that.

Mr Solo (ANC) referred to the department's output on public awareness and asked how the department was planning to effect this - more specifically in the rural areas

Mr Ngubeni (ANC) asked how was the department was planning to maintain coordination between the government departments right down to the municipalities.

Mr Kompela (ANC) needed some clarity on the envisaged cooperative budget. He also wanted to know whether the disaster management branch had any intentions of incorporating indigenous knowledge.

Mr Nonkonyana (ANC) asked for some clarity on the disaster management policy framework. Was there SADC cross border assistance and a SADC policy framework on disaster management?

Mr Louw (ANC) asked if there were programmes in place for people experiencing drought in the Limpopo province.

Mr Buys (Department) responding to the above questions, stated that the Disaster Management Act was in the process of being promulgated and as soon it comes into operation, the department would have a two year framework to effect its objectives.

With regard to the awareness campaigns, the department was currently working on various campaigns for the purposes of public awareness. He made mentioned of education campaigns as well as audio CDs stations on disaster management in all African languages which would be disseminated to various radio stations.

On the question of the incorporation of the indigenous knowledge Mr Buys stated that this issue would be covered under the framework envisaged in the proposed Act.

On a SADC policy for disaster management, Mr Buys pointed that a document had been drafted and forwarded to the SADC sub-committee on disaster management. The department was still waiting for a response.

The Director General added that the department was looking forward to putting more mechanisms in place in 2003 to increase public awareness and that the role of the department was to provide a proper system and an enabling responsive framework.

Institutional Capacity Building and Support
Mr S Selesho outlined the strategic objectives for the 2003/4 financial year and juxtaposed them with the achievements from the previous year (see document). The white paper on traditional leadership and governance would be finalised in 2003.

Mr Kompela (ANC) asked how the management support team was planning to support municipalities and at what level were they going to intervene to detect problems in the municipalities.

Mr Selesho replied that the management support team had been established by the provinces to assist municipalities in financial constraints and to work in advance by providing integrated interventions.

Ms Southgate (ACDP) asked if the Bill on traditional leaders was a priority to the department and how was the department intending to remunerate traditional leaders.

Mr Selesho replied that it was important to have legitimate traditional leaders and that the proposed Bill was intended to protect the integrity of traditional leaders as an institution.

Ms Southgate asked for clarity about Institutional Support - what was going to happen to the municipalities who had applied for reclassification?

Ms Manche replied that the department did not have municipal classification anymore as the grading system for the municipalities had been abolished.

Mr Carrim asked the department that in its future presentations it should try to provide quatified projected outputs (with figures), as it was very difficult for the committee to measure progress if outputs were not quantified.

Performance Management, Equitable Share and Municipal Finance
Mr S Dzengwa assessed this directorate's achievements to date and outlined its projected outputs for the next three years (see document).

Mr Kompela (ANC) asked if there had been any measures taken by the department in ensuring that managers employed in the capacity building centres remain in those centres to improve human personnel in those respective capacity building institutions.

Mr Molepatsi (ANC) asked if there had been common problems experienced by the department in monitoring progress in the previous financial year and which were the targeted municipalities for this year.

Mr Ndzwengwa responding broadly to the questions posited above informed the committee members that there was a framework to measure progress for example he mentioned that the department was currently providing incentives awards for municipalities who were excelling in service delivery while simultaneously helping those municipalities who were underperforming. Moreover the department was using the aforementioned quarterly reports as indicators of patterns of spending in various municipalities thus by that measuring progress.

The Director General added that the current performance systems were covering the performance at those capacity building centres as institutions as well as performance of the individual. She further informed committee members that the department was also intending to also measure whether an institution had performed its mandate.

Auxiliary and Associated Services
Mr E Africa noted that in 2002/3 this programme had involved five sub-programmes, including communication services, transport, the House of Traditional Leaders and the Municipal Demarcation Board and the Section 185 Commission. The under-expenditure was because of the roll-over of funds set aside for the establishment of the Section 185 commission. In 2003/4 two sub-programmes would be added: the South African Cities network and the Commission on claims and disputes on traditional leadership.
National House of Traditional Leaders
The objectives are that the House should provide a collective voice for traditional leaders, promote unity amongst them, promote customary society and influence government policy.

Section 185 commission
This commission was to be set up to implement the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities Act [No. 19 of 2002]. This would take place in four phases: requesting nominations, selection of members, establishing the commission and the work of the commission. The Department was currently in phase one.

Municipal Demarcation Board
The board's duties are to review municipal boundaries ensuring that these promote socio-economic development, advise the government on boundaries, and ensure the proper geographical definition of municipalities.

South African Cities Network
This was launched in October 2002 and registered as a Section 21 company. It has nine members: the six metros, Mangaung, Buffalo City and Msunduzi. A CEO has been appointed and has offices in Johannesburg in terms of an agreement with the city. Its work can be divided into four themes: economic growth, urban poverty, good governance and financial sustainability. It facilitates information exchange, training and capacity building, peer review and support.

The starting point for the development of the Cities Network was the need for a differentiated set of support strategies for the various kinds of municipalities. Networks were being considered for district councils and medium sized towns. The Cities Network was part of a knowledge-sharing network.

He noted that although the average per capita wealth of cities was five times higher than that of the poorest twenty percent (R25 thousand versus R5 thousand), this masked the high level of poverty in cities. With the shift towards a knowledge economy, many people in cities were becoming unemployable.

Nevertheless, cities are engines of the national economy and the basis for redistribution, with eighty percent of GDP coming from twenty percent of municipalities and eighty percent of manufacturing output coming from the six metros. Cities were a focal point of national economic strategy: the Cities Network strategy thus extended beyond giving municipal support to all spheres of city government, civil society and the private sector.

Increase in personnel budget
Ms G Borman (DP) asked about the increase in the personnel budget - had staff numbers been increased?

Mr C Clerihew (Chief Financial Officer, Department) replied that the increased personnel figure reflected the appointment of a permanent chair and deputy chair and four other officials of the National House of Traditional Leaders.

Exercise of Traditional Leadership
An ANC member asked to what extent traditional leaders exercised leadership as set out in the briefing document.

Assessment of Demarcations
An ANC member asked when and how the demarcations were assessed - is the Demarcation Board its own referee in this?

The Chair responded that Parliament assessed the work of the Demarcation Board. However, there was a point to the question as Parliament did not have the capacity to do this properly. Did the Department monitor the work of the Board to an extent consistent with its independence? He was concerned that there were municipalities that were not viable and that this was substantially because of their demarcation.

Mr Clerihew stated that the Board reported to Parliament in terms of its legal status.

Assistance to the House of Traditional Leaders
Mr S Mshudulu (ANC) asked if the Department had provided the House of Traditional Leaders with assistance in administrative matters.

The Chair responded that he had discussed this with the Minister and had letters from the Minister and CEO of the House of Traditional Leaders to confirm this.

Mr Clerihew replied that the Department was providing assistance on administration and accounting issues. It was very difficult to assess what House of Traditional Leaders committees were doing. The legislation establishing the House made no mention of administrative authority except that the House can appoint a secretary. Although the House submitted their budget to the Minister, there was no obligation for it to submit the budget to the Department. The House sought funds for travel and capacity building so that they could be independent of Ministerial control.

Launch date of the Commission for Linguistic, Religions and Linguistic Communities
The Chair proposed that the Department consider launching the Commission on the Promotion and Protection of the Rights of Linguistic, Religious and Linguistic Communities on Heritage Day.

Mr Africa responded that no date had been set but that it was likely that the Commission would be launched in the third quarter of 2003. The Department would consider Heritage Day as a launch date.

Portion of SA Cities Network funds spent on administration
Ms Borman noted that the South African Cities Network was raising a lot of money - was this going on administration or on support mechanisms for the member cities?

A Department official replied that of the R8.7million budgeted for the year starting in July, R5.7 million was to be spent on programmes and products such as training and R2 million on setting up a national secretariat.

Problem of 'Emerging Metros'
The Chair was concerned that many municipalities thought that they were emerging metros, but were not.

A Department official replied that cities had been selected for membership of the Network based on contribution to the national economy. They had been told at the start that the Network was not the place to lobby for category A status.

The Chair responded that the self-designated 'emerging metros' sought metropolitan status to escape the responsibility for districts.

Ms Southgate (ACDP) asked when the Commission on claims and disputes on traditional leadership would be set up. Would this be in a Bill?

The Department replied that the Commission would be established when the legislation was passed.

Mr G Mokate took the Committee through the PowerPoint presentation on Administration, adding the following:

The Department had implemented learnerships to comply with the Skills Development Act. In the area of Employment Equity, the focus was on increasing the number of women at Senior Management level. Government policy on preferential procurement was implemented with a focus on companies founded by women.

Human Resources
The Department had most of the required policies in place. Peer reviews found the Department HR systems satisfactory, indeed 'better than most'.

The Department sought to improve the profile of its programmes. High level management had been employed in communication efforts and the Department would continue to focus on improving its capacity in this area.

Budget excludes Ministerial and Director General Offices
The budget figure of R37 million excluded the Minister's and Director General's offices. If these were included, the budget was R63,2 million.

Preferential Procurement
R11.4 million (54%) of the procurement budget went to historically disadvantaged institutions. R3.8million of this went to companies with majority shareholding by women. The Department hope to improve this. In doing this they would look at the internal makeup of companies to ensure that the historically disadvantaged were operationally involved and not merely a front.

Ms T Mketi took the Committee through the PowerPoint presentation on Organisational Transformation, adding the following:

Units are to be set up to deal with each of the staffing priorities. Units to deal with ISRDP/URP work and with corporate governance support had already been approved by the Minister. The others were still being established.

Vacancies at Senior Management level were because the units had not yet been established. Vacancies at lower levels were because of the moratorium on appointments at such levels.

Rightsizing (Resolution 7)
This was to deal with supernumaries - placing them in permanent positions so that they could be properly utilised. The Department has no excess staff.

The PSLDP leadership programme targetted middle management to build capacity for promotion to senior management.

Municipalities were struggling to finalise staffing because of lack of organisational development expertise. The Department was building capacity in this to assist the Municipalities.

The leadership programme targeting of women at middle management level was part of the strategy to achieve equity.

The Chair noted that there had been exhaustive discussions on transformation in the past. The Department is managing the process very adroitly.

Ms Borman raised the international report on corruption presented to the media by the Minister, which placed local government fourth highest on the list for corruption levels. Procurement had been identified as an area of corruption. What was being done about this?

Mr M Ngubeni (ANC) asked if this was an official report.

Ms Southgate raised the issue of corruption in tendering within the Department.

Mr Mokate responded that the report had been discussed and the Department was in the process of establishing systems to deal with corruption. It will assist Municipalities in dealing with corruption, in part through the corporate governance unit. He could provide detailed information on corruption in the Department if the Committee wished. There had been only three serious cases in the past two years. These had been dealt with internally in the first instance, with criminal investigations where these were called for. Corruption had not been a big problem either in terms of the number of cases or in terms of the money involved.

Citizen-friendly local government
Ms Borman stated that it was important that local government be citizen-friendly. Is there anything the Department can do to assist in this?

Mr Mokate replied that the Department was to assist Municipalities in this area.

Staff Turnover
Ms Southgate asked about the rate of staff turnover - were there still problems with losing staff?

Ms Mketi replied that while there was still a lot of movement within the Department, especially at the level of Assistant Director and higher, there had been fewer terminations and transfers to other Departments.

The Chair raised the matter of over-representation of groups and equity. Non-racialism is not the same as colour-blindness.

Ms Mketi responded that that there was a dedicated effort to improve black representivity, with black understood to comprise African, Coloured and Asian persons.

An ANC member stated that while he had no problem with the focus on women, the Department ought also to focus on disabled persons.

Mr Mokate replied that the omission of disabled persons had been unintended. The Department's policy focussed on both women and disabled persons.

The Chair adjourned the meeting.

Appendix 1:
Performance Management Equitable Share Municipal Finance
11 March 2003

Presentation to cover:
- Achievements made in 2002/03
- MTEF Allocations
- Outputs for 2003/04
Projected outputs for 2004/05 and 2005/06
- Challenges

Fiscal Transfers
· Increases to Local Government Funding:
- Substantial additional funding was secured for local government in the short to medium term
- From 2002/03 to 2003/04
* local government equitable share increased from R4bn in 2002/03 to R5,2bn in 2003/04
* In addition, R1,1bn will be invested towards the provision of FBS (R300m for Free Basic Electricity and R822m for other FBS)
* For the first time, equitable share allocations were made directly to district municipalities
* Cost of governance, which was previously allocated only as an adjustment in the 2001/02 budget, was incorporated into local government equitable share

Municipal Finance Policy
· Cabinet approved the Property Rates Bill in November 2002 for introduction into Parliament
· Draft Policy framework for the division of fiscal powers and functions between category B and C municipalities completed.
- A draft policy framework and Bill can only be completed once the MECs adjustments decisions have been made.

Municipal Finance Monitoring:
A national database has been developed to capture information on municipal finances
· Three quarterly reports on the financial situation of municipalities were produced
· A national report on municipal debt was tabled publicly on 5/6 December 2002
· Local Government Support Program
- R173 million has been transferred to all provinces for the implementation of the municipal support program
- To date, the Department supports 112 small and medium sized municipalities through the program (MS P)
- Development of debt recovery plans 5 municipalities have been assisted to develop their debt restructuring plans (Tsantsabane (NC), Dihlabeng (FS), Mquma (EC),Nokeng Tsa Taemane (GP) and Mogale City (GP)

Local Government Support Program
· MSP financial assistance has been given to more than 20 municipalities to pay for their statutory obligations (viz; Audit fees, ESKOM, SARS, Pension, etc.)
· A best practice manual for financial management has been developed

Performance Management:
· 26 Municipalities participated in the PMS Pilot program that concluded in October 2002
· A Best Practice Report based on the experience of the pilot program has been developed and is in the process of being distributed to all municipalities
· 4 quarterly National Status Quo Reports on the transformation of local government have been produced
· A draft policy framework on monitoring performance of provinces has been developed
· A municipal performance excellence scheme was initiated and will be implemented







Operation Budget





Chief Director





Performance Manager





Fiscal Transfer





Municipal Finance Monitoring and Project





Municipal finance










Local Gov Capacity Building





Municipal system improvement Grant





Equitable Share





Local Govt Transition Fund





· Budget provides for key strategic activities to be pursued during the MTEF cycle Increase in grants and equitable share reflects the priorities and key gaps that the outputs for the MTEF will seek to a address
· Budget reflects complementarity of work to be undertaken with that of other units, partners and
· Expenditure patterns will increase inline with the vacant posts that will be filed

Fiscal Transfers:
· Undertake a review process of the LGES formula Seek to introduce a revenue-raise component in the LGES from 2004 onwards
· Update baseline data with 2001 Census data
· Develop holistic picture of municipal finances incorporating all revenue streams (fiscal gap')
· Pro- actively communicate with municipalities on the local government equitable share and other related issues
· Determine appropriate link between LGES and operational and maintenance costs of established infrastructure

Municipal Finance Policy:
· Undertake work that will facilitate the processing of the Properly Rates Bill through Parliament.
· Concretize the policy framework on the division of fiscal powers and functions between category B and C municipalities and draft the necessary Bill for processing through Parliament.
· Work with National Treasury and other stakeholders on the reform of the Regional Services Council (RSC) levy

Municipal Finance Monitoring:
· Consolidate municipal monitoring instruments and produce quarterly comprehensive progress reports on transformation, finances and other aspects
· Assist in enhancing the capacity of the provincial departments and the PIMM centers so that they can effectively assist municipalities
Coordinate the implementation of the Revenue Enhancement Program for the stabilization of municipal finances

Performance Management and Monitoring:
· Finalize the policy framework on provincial performance monitoring
· Develop a framework for conducting Community Surveys on municipal services
· Assist in building the capacity of provinces to monitor and support the implementation of municipal PMS Implement the Municipal Performance Excellence Award scheme

· Continue work on the reform of the LGES
· Assist with and monitor the funding and implementation of FBS
· Monitor the implementation of the Property Rates Bill by municipalities
· Monitor the implementation of the division of fiscal powers and functions by municipalities
· Continue work with National Treasury on the reform of the RSC levy and make necessary interventions during implementation
· Monitor and coordinate the implementation of the Revenue Enhancement Program

Appendix 2:

National House of Traditional Leaders
Government commits resources (R5,6m for 2003/4) to the House for it:
· To serve as a collective voice of traditional leaders on governance issues.
· To promote the unity of traditional leaders as pant of the nation building protect.
· To promote customary interests of traditional communities. To influence government policy and legislation impacting on rural areas.
· To promote development in rural areas.

Section 185 Commission
Commission of Cultural, Religious & Linguistic Communities Act (Act 19 of 2002)
· Parliament passed Act in June 2002
· Signed by President in June 2002
· Presently in implementation Phase of Act: 4 phases -
(a) Nomination; (b) Selection and Appointment ; (c) Establishment of commission ; (d) Consolidation & implementation of work
· Government has set aside R9.1m for 2003/4
· Convening of first nations consultative Conference (2004)
· Regulation of the recognition of community councils (2004)

Municipal Demarcation Board
· Government commits resources (R14,3m for 2003/4) to the Board for it,
· To ensure that municipal boundaries reinforce the vision of developmental local government.
· To periodically review boundaries and ensure that they promote socio-economic development.
· To advise government on issues of capacity and powers and functions.
· Ensure that geographic jurisdictions of municipalities are properly defined.

SA Cities Network
· Cities Network launched on 7 October 2002 by the Minister of Provincial and Local Government
· SA Cities Network Company registered as Sec 21company in December 2002
· Appointed CEO and Executive Director in January 2003
· Service Agreement with City of Johannesburg signed in February 2003 to supply premises and support Systems
· Secured R1.5 Million per year for the three years on DPLG budget


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