The Departments of Cooperative Governance and Traditional Affairs presented their 2015/16 annual reports to the Committee, which also heard progress reports on the implementation of the Integrated Urban Development Framework and the finalisation of transitional measures in newly-established municipalities. A status report on the application of Section 139 of the Constitution at distressed municipalities was also presented.
The Department of Cooperative Government (DCOG) said it had achieved 65% of its 55 targets. One of its most important intervention initiatives was the “Back to Basics” (B2B) programme, where all the targets in the various provinces had been achieved. It had received a qualified audit opinion based largely on insufficient and appropriate audit evidence for payments made to the Community Works Programme (CWP) and for the CWP’s movable tangible capital assets, as it had not maintained an asset register that adhered to the Treasury’s minimum requirements.
Some key findings by the Department were that steps were not taken to prevent irregular expenditure, the reported achievements against planned targets were not reliable when compared to the evidence provided, and there was a failure of leadership to effectively monitor the timeous implementation of action plans developed to address internal control deficiencies. With regard to financial performance, the Department had managed to finalise the Traditional Leadership Protocol Guidelines for two kingships which were endorsed by the kingships, as well as in developing the National House of Traditional Leaders (NHTL) HIV and AIDS prevention support project, implemented in collaboration with the Department of Health and DoH and the SA National Aids Council (SANAC). A major area of concern was the failure to reduce initiation deaths by the targeted 10%, as it had been found that deaths had actually increased by 10% instead. There was call for the Department to work with appropriate stakeholders in drafting laws to criminalise illegal initiation schools, as well as to protect initiates
Committee Members were concerned with the prioritisation of the Department’s finance and resources. The Department had highlighted that the Information Communication Technology (ICT) Architecture Enterprise was an important project, designed to improve the culture of payment for services, yet it had not been initiated because funds had been reprioritised in December to pay for the FeesMustFall campaign. The project was revenue-generating, so why had funding been taken from a revenue-generating project to fund FeesMustFall? The CWP also needed more attention. It appeared that the department's priorities were wrong, and this needed to be addressed. A Member argued that there should be a declaration of a national drought emergency, given the supporting evidence. However, the Department and the Minister disagreed, saying there was no need to do so, given the consequences of such a declaration, as well as the fact that the situation was being managed and sustained.
The presentation of the IUDF highlighted the importance of the role of the Department in the urbanisation context of South Africa and the positive gains and challenges that presented themselves. The Department planned to use support from the spatial development framework (SDF), the integrated development plan (IDP), the medium term expenditure framework (MTEF) and the service delivery and budget implementation plan (SDBIP) in implementing the IUDF. A concern raised was that there was no mention of spatial planning and land use management (SPLUM) within the initiative. This was a flaw, as SPLUM would be of great benefit if integrated with the IUDF.
There was a presentation on the boundary redelimitations finalised by the Municipal Demarcation Board (MDB) in 2013 and 2015, which led to discussion about the Municipal Demarcation Transition Grant (MDTG) and its distribution. Before the local government elections, municipalities had asked to receive 60% of the grant in order to fund the elections. This had been granted, except for a few municipalities in the Eastern Cape and Limpopo, where it was felt that the funds might be abused. They were due to receive all their funds after the elections..
The Department explained the process involved in implementing Section 139 of the Constitution when municipalities were unable to fulfil their obligations. However, it listed a wide range of challenges associated with the implementation, and recommended that the Portfolio Committee take note of the current status of the interventions, and that it supported the process of the development of the Intergovernmental Monitoring, Support and Interventions Bill, to assist in alleviating the challenges.
Minister’s Opening Remarks
Mr David van Rooyen, Minister of Cooperative Governance and Traditional Affairs (CoGTA), said the status report of municipalities under Section 139 of the Constitution would be presented to the Committee, and the progress made with the new transition measures had been finalised. The Department was set to focus on carrying out its mandate, which aimed to turn the local government sector into one that responded to the needs of the South African people and was geared towards improving the quality of their lives.
Central to the progress of the Department was that there had been a realigned in the organisational structure to allow for full implementation of the Back to Basics (B2B) programme and the rollout of the management framework. The previous financial year had been challenging for the Department, from dealing with a crippling drought to ensuring that the preparations for the elections were on course. Through the National Disaster Management Centre, the drought had been managed.
The municipal demarcation board had played an important role in the implementation of plans in various municipalities to improve their financial standing. This had resulted in the number of municipalities being reduced from 278 to 257. The Department had been congratulated on the successful coordination of the local elections. It aimed to change the face of local government for the better. Improving on infrastructure delivery remained a core challenge, but this was being addressed through improved spending and through the Municipal Infrastructure Support Agency (MISA).
A key challenge encountered was how to manage the Department's Community Works Programme (CWP). The primary goal of the project was to provide work opportunities for the poor and unemployed. The programme was to provide basic necessities for families of beneficiaries of the programme. Home-based care and centres for the elderly were also supported by the CWP. Another key challenge was that the implementation of the programme required the Department to work with implementing agents who were Non-Profit Organisations (NPOs). Most NPOs failed to comply with the provisions of financial management, as well as to basic provisions around issues of supply chain management (SCM). CoGTA had problems with monitoring the roll-out of the programme across the country. An action plan had been developed to deal with specific issues, and critical to the action plan was the redesign of its implementation. CoGTA was working with the Treasury to review the current programmes model. The B2B was an important programme for the Department.
Department of Cooperative Governance and Traditional Affairs (COGTA): Annual Report
Mr Muthotho Sigidi, Acting Director General (ADG), DCoG, reported on the Department’s performance against its targets. The administration programme had four annual targets, of which one had been achieved. Three of the policy research and knowledge management programme’s five targets had been achieved, as had 11 of the governance and intergovernmental relations programme’s 15 fifteen targets, and all four of the National Disaster Management Centre programme’s targets. The provincial and municipal government support programme had 13 targets, of which nine were achieved, while the infrastructure and economic development programme – which was where the CWP had been located -- had 14 targets, of which eight had been achieved. 19 out of 55 targets had not been achieved, and a comparison with the previous financial year indicated there had been a percentage decline.
In the new budget structure, in the area of reorganisation and realignment, the DCoG had come up with five programmes. The first was urban development and legislation support, which included the Integrated Urban Development Framework (IUDF). The second programme was institutional development, which had a number of sub-programmes. The annual targets in the current Audit Development Programme (ADP) were largely focused around institutional development. The National Disaster Management Centre had two sub-programmes, and local government support and management had three sub-programmes.
The B2B was recoded in the fourth programme. Quite a number of interventions that had taken place in programme four sought to reinforce what was occurring in programme two. The last programme was the CWP. This was the DCoG’s new budget structure, and all reports for the next financial year would be based on it.
Looking at the 2015-16 projects in detail, each programme had an issue that the Department had to perform with regard to B2B interventions in coordination with identified municipalities. In Programme 1, the focus had been on the Northern Cape and Free State provinces, where their targets had been achieved. The target set for four B2B assessment reports to be submitted to the Minister had not been achieved, as one report was still outstanding at the end of the financial year. The Section 48 report was meant to be developed by the end of March 2016, but this had not been achieved. The target was not achieved, as one report was received later than the target date set. The Annual Performance (AP) report was consolidated and submitted to the governance and administration (G&A) Cabinet committee. The fourth target on the question of skills audit outcomes implemented as per the HR plan was not achieved, as the skills audit was not conducted.
In Programme 2 (policy research and knowledge management), the focus was largely on North West, and the annual target set for the province was achieved. The second target was for the development of an information hub by the end of March 2016, and the information hub's prototype was developed. There was also the design of SharePoint and a B2B space which was created and tested. The next target was to look at the 20 best practice case studies documented and published. The target had not been achieved, as only ten of the case studies were documented and submitted for publication on the CoGTA website. The case studies published were being used to share lessons learned with other struggling municipalities. Another target set was to develop an Information Communication Technology (ICT) Enterprise Architecture Centre. This had not been achieved as the process to approve the terms of reference (TOR) took longer than expected. The target for information systems around B2B was achieved and they were being implemented to capture municipal information.
In Programme 3 (governance and intergovernmental relations), the focus was on the B2B interventions in Limpopo. This target had been achieved. The target to promulgate the Intergovernmental Monitoring, Support and Intervention (IMSI) Bill had not been achieved, as it was not promulgated as planned. The Cabinet had not yet given its approval, which was a prerequisite for the Bill to be tabled in Parliament. Another target was to put out four reports on the implementation of Outcome 9, presented to the Inter-Governmental Relations (IGR) structures. The target had been achieved, as all four quarterly Outcome 9 progress reports were discussed at the IGR structures, tabled and approved by the Cabinet Committee.
The fourth target was to have initiatives to influence the ability of municipalities to collect outstanding debt developed and implemented in 60 municipalities. The target had been achieved, as all 60 municipalities' credit control and debt collector policies were analysed, and one municipality was assisted on the identification of ownership and billing of government properties. The fifth target set, which was not achieved, was the issue around building a national campaign on improving the culture of payment for services. The campaign was not initiated because of financial constraints, as around December the budget had had to be reprioritised by the Treasury for the “FeesMustFall”. The sixth target was to achieve 58% of unqualified audits for the 2014/15 financial year audits at the municipal level. The target had been achieved, as the municipal audit reports reflected that 64% of unqualified audits were released. Target seven was to report on the coordination and monitoring of the training of Municipal Public Accounts Committees (MPACs) in all dysfunctional municipalities, as well as in municipalities with adverse and disclaimer opinions. This was achieved, as there was a report on MPACs as well as training in various provinces and municipalities.
For the eighth annual target, the target was for 152 municipalities to be assessed for compliance with the Municipal Property Rates Act (MPRA) and guidance provided to non-complying municipalities by 31 March 2016. The 152 municipalities were assessed and recommendations and corrective measures in the case of non-compliance was communicated in writing, so that when municipalities planned their budget structures, then the issues highlighted would be considered. The ninth target was for the public participation regularity framework to be piloted in 50 dysfunctional municipalities. This target had been achieved. The tenth target was to conduct a nationwide satisfaction survey. The target was achieved, and the report had contained valuable information.
A target had been set for 27 B2B municipalities to be supported in order to implement citizen empowerment programmes. The target was achieved. Programme 3 also sought to monitor the functionality of ward committees, in line with the implementation of ward operation plans. This had been achieved. Another target was to implement anti-corruption measures by a set target date in almost all municipalities. This target had not been achieved. There had been engagements with provinces on the review of the local government anti-corruption strategy and the Integrity Management Framework (IMF). The Minister had requested the DCoG to come up with an implementation plan, which had been approved almost after the end of the financial year. There was a target set to submit an annual progress report to the Minister on cases reported, investigated and prosecuted. Lastly, the target set to develop and implement a local government code of governance was not achieved because of the shifting of resources to B2B.
In Programme 4, the National Disaster Management Centre was focused on the Gauteng province in relation of B2B interventions. The target set had been achieved. The first draft bill on Fire Services was finalised after consultations with various stakeholders. The third target -- the national disaster management and fire services advocacy -- had been achieved, as these activities took place in various provinces, including the North West, Gauteng, the Western Cape and KwaZulu-Natal. The North West support was in relation to the dolomitic sinkholes awareness campaign. The last target set was for the DCoG to come up with a report on the implementation of a disaster management monitoring and evaluation framework. This had been achieved, as a database of disasters declared for KwaZulu-Natal, Mpumalanga, Western Cape, North West, Northern Cape and the Eastern Cape for 2010 to date had been developed and the data validated against the professional services’ reports / allocation letters and Parliamentary responses.
In Programme 5 (provincial and municipal government), the focus was on KwaZulu-Natal, where the target was achieved in relation to B2B. The second target was to file a status report of municipal managers and Section 56 managers’ posts in identified priority municipalities. The target had been achieved. The third target was to report on the status of appointment of suitably qualified municipal managers and Section 56 managers. The target was achieved. Four quarterly reports on the number of corrective measures taken to enforce compliance with competency requirements, as prescribed in the Municipal Systems and Regulations, were completed.
The fifth target regarding the guidelines on rules and responsibilities of office bearers and development of a delegation framework was not achieved -- although the draft of the guidelines was done, the guidelines were not necessarily implemented. A target was set to carry out and facilitate preparations for the 2016 local government elections, and was achieved due to engagements with various stakeholders, including the MinMEC, Technical MinMEC, the President's Coordinating Council (PCC), Technical Task Team and Inter-Ministerial Task Team on municipal elections, and the Municipal Demarcation Transition Committee (MDTC). The target set to implement the Local Government Laws Amendment Bill was achieved and the Bill was presented to the G&A Cabinet on March 1 2016, and approved for introduction to Parliament. The target which focused on the local government skills development institute had not been achieved.
The target for implementing capacity-guiding strategies and intervention plans for councillors and officials had been achieved. The strategy had been work-shopped through the Human Resources and Infrastructure Deployment Programme (IDP) in all provinces. The last target with regard to the Batho Pele service standards framework was achieved.
The annual target set to support and develop long-term strategies and spatial development frameworks (SDFs) had not been achieved. Approval had been granted by the World Bank to offer technical support for the development of a toolkit for integrated spatial planning in secondary cities and fast growing towns. The approval came too late. The target set to support 12 districts to develop integrated development plans (IDPs) that reflected sectoral and spatial coverage was achieved. The target to include an oversight report on the state of governance in local government was not achieved.
In Programme 6 (infrastructure and economic development), the focus was placed on Mpumalanga, the Eastern Cape and the Western Cape. The B2B target was achieved. The target which looked at convening Inter-Ministerial Committee (IMC) meetings was achieved, and decisions were implemented by various stakeholders.
45 municipalities were supposed to be supported following the handover of their targets to the Municipal Infrastructure Support Agency (MISA), but this target was not achieved. The target to have 70 municipalities supported to update the indigent registers had seen a total of 136 municipalities supported. In total, 22 partnerships with municipalities to implement programmes with the private sector were established, and the target had been achieved..
The annual target set in relation to the CWP was to have an additional 10 000 work opportunities provided. The target was achieved, with 13 1555 work opportunities being provided. The target to have ten additional municipalities sites established was achieved, as 30 new additional sites were established. for the 2015/16 financial year. The target to have 100% of participants and relevant stakeholders trained by a set target date was not achieved, as only 6 915 participants and relevant stakeholders were trained. The target to have five partnerships established to expand the CWP was achieved, notwithstanding the issues that already been raised by the Minister and in the DCoG’s financial performance report.
The 2015/16 audit outcome for the DCoG had gone from unqualified, to qualified. There had been the development of an integrated management tool which was the DCoG’s post-audit plan to address all audit finances as well as other internal control weaknesses that it faced. The Department had put forward a roadmap towards achieving a clean audit, running in parallel with the integrated management tool. The progress on actions identified towards the internal control weaknesses was being monitored on an ongoing basis. Furthermore, management meetings were held on a monthly basis.
The emphasis of matter was more on the restatement of the corresponding figures, where most issues were disclosed in the annual financial statements. The Auditor General (AG) had found that some issues disclosed represented irregular expenditure. The DCoG said that in some instances, certain procedures were not followed hence errors had occurred.
The key findings by the AG on predetermined objectives of the Department would be discussed further between the AG and the Committee. Actions were currently being implemented in order to address some of the findings of the AG. The usefulness of reported performance information was being looked at. With regard to compliance with legislation, the DCoG had managed to implement the introduction of Modified Cash Standards (MCS) which had been one of the issues that it had to deal with. The actions on expenditure management being implemented were illustrated.
With regard to leadership in internal control, the key actions being implemented were to review and maintain an integrated and complete compliance register for all functional corporate support areas in terms of legislative and policy requirements. The assessments were being conducted by the DCoG on a monthly basis.
Mr Sigidi then described the achievements and challenges arising from the financial performance report.
In programme 1, there was a virement of R31 million, and the final appropriation for 2015/16 was R271 million, of which R269 million (99.4%) was spent. Programme 2 had a final appropriation of R19 million, of which R17 million (92.9) was spent. In programme 3, the final appropriation was R51 billion, which included the equitable share, with R49 billion (95.5%) spent. In Programme 4, the final appropriation was R591 million, of which R258 million (43.7%) was spent. For programme 5, spending on the final appropriation of R329 million was 89.1%, for programme 6 the final appropriation of R17.6 billion was 100% spent. Details of expenditure by economic classification were presented.
There had been two broad investigations that had taken place. One was related to the travel agency utilised by the Department. There was a fraud case which involved an official in the Department as well as an employee of the travel agent. The travel agent’s employee had been fired, and the DCoG official had been subjected to a disciplinary process that had resulted in a decision by the presiding officer for the official to be released. The official had appealed to the executive authority, which had asked for assistance from an external source regarding the matter. The case was running in parallel with a criminal case in the Department.
The other matter highlighted was the forensic case involving the Community Works Programme (CWP). There had been a preliminary report, and when it was due to be implemented, the DCoG, along with the AG and implementing agents, had realised that additional issues might surface. The report would soon be finalised, so when the DCoG received all the recommendations it would be able to take them into account.
Mr K Mileham (DA) said that he had many questions related to the Department's performance targets. With one indicator, the reasons for variances were not addressed in the slide presentation, but they were addressed in the annual report. In the slide, the reason for the variance had been ten case studies developed instead of 20, but in the annual report it was stated was that the ten case studies were not developed and the project was not realised because the Department did not have the funding or human resources to implement the project. In the annual report, reasons were given for the variance, but in the slide, a fact was stated instead. The question was, why had DCoG set themselves the target, knowing that they did not have the capacity to implement or develop it.
He asked why there was a delay with regard to the ICT Enterprise Architecture. The indicator dealing with the national campaign on improving the culture of payment for services had been described as crucial by the ADG, yet it had not been initiated because funds were reprioritised in December to pay for the FeesMustFall campaign. The project was revenue-generating, so why had funding been taken from a revenue-generating project to fund FeesMustFall? This was a critical issue for municipalities, as they were under-recovering revenue from across the board. Surely there were other projects that could have been reprioritised?
There was talk about municipalities implementing anti-corruption measures. What were causing the delays in their implementation? When would they be implemented? In the annual report, it was stated that a project to explore other alternative platforms for improving good governance and ethical culture had been halted following legal opinion. Clarity was needed on why a legal opinion was needed on how to improve good governance, and on why a legal opinion was needed on a code of conduct of good governance? What was wrong and why did other alternatives need to be explored. What was the current situation with the good governance project?
Mr E Mthethwa (ANC) asked whether, in terms of the administration performances in Programme 1, any measures were in place that sought to correct the situation.
Mr A Mudau (ANC) asked how long it was going to take the Cabinet to bring the Local Government Laws Amendment Bill to Parliament. The ADG and the Minister had mentioned that more details would be given with regard to the CWP. The DCoG’s mission statement had said that it was to ensure that all municipalities performed their basic responsibilities and functions without compromise by putting people and their concerns first, but the infrastructure and economic development achievement had been only 43% against target. Had it been a knee-jerk reaction to assert that the DCoG had done well in respect of the CWP?
Ms N Mthembu (ANC) noted that even though there were areas where the Department had fallen short, it appeared to be doing its work and could identify where it had problems. It was able to identify solutions to the challenges they faced, and they did have a clean audit. When talking about the CWP, the Department was able to highlight that they were making strides and also able to identify where they were experiencing shortfalls. She asked the Department to report back on how far it had gone with its forensic investigations.
Mr Themba Fosi, Deputy Director General (DDG): COGTA, replied to the question of the case studies, and said this involved the broader question of the impact of the reduction of the budget in the Department. It had had to look at ways for it to reorganise itself internally in relation to some of the targets that had been set.
Mr Sigidi spoke on the issue of reprioritisation that had to take place when the B2B programme was established. Consequently, some people and resources had been shifted, hence the reduction in the number of case studies worked on. With regards to the issue of ICT Enterprise Architecture, when looking at its process, and before the development of the terms of reference, the State Information Technology Agency (SITA) had been consulted in order for the Department to make sure they were in compliance with the government around ICT. This process had taken a long time and led to a delay with the project. A service provider had been appointed.
Dr Kevin Naidoo, Executive Manager: Municipal Governance, COGTA, responded to the two questions relating to the code of good governance and the Local Government Laws Amendment Bill. The sponsoring on the code of good governance project was essentially based on the work done by the King III report, which had begun dealing with municipalities, and work was also being done around King IV. The code of conduct for the Department's Muncipal Systems Act was finalised, and other options were being explored as to how it could deal strongly with promoting good governance in municipalities.
The Local Government Laws Amendment Bill had subsequently been split. Initially it had dealt with amendments to the structures in the Systems and Demarcation Acts. This had subsequently been streamlined to deal with amendments to the Municipal Structures Act. The Cabinet had approved the Bill to be introduced to Parliament, but after subsequent discussion it was decided that the scope of the amendments to the Municipal Structures Act be broadened to deal with more matters, such as strengthening the provisions in Section 79 dealing with the establishment of committees, etc.
The provision which dealt with the amendment of the norm for the delimitation of wards in the bill was to be considered. This matter had also been raised in discussions on demarcation which had taken place in June. A more comprehensive approach to the legislation had been preferred, hence the Bill had not yet come to Parliament.
Mr Sigidi responded to the issue on the culture of payment. The Department had identified that the project was important, and the R5 million funding was repriotised as it had known that it was going to use the Government Communication and Information System (GCIS) to roll out the campaign. When the GCIS had already started to put together the campaign strategy, the R5 million was meant to be transferred from the Department to the GCIS, but during the adjustment process it had to forgo some amounts, which meant that some positions advertised were lost. The position of Deputy Director General in Urban Development and Policy Research had to be scrapped. It was decided that because November was approaching and they had not started yet, perhaps when they did start they would be able to obtain some funding from Treasury. That was the reason for the target regarding the culture of payment not being achieved.
Regarding the delay in the implementation of the anti-corruption strategy measures, Mr Sigidi said that the anti-corruption strategy was reviewed by a number of stakeholders, including the Treasury and the South African Local Government Association (SALGA). The result from this had been two broad documents; the anti-corruption strategy and the integrity management framework. The Minister said he wanted an implementation plan for those particular strategies, and by the time that had been approved, the Department had been unable to start with either the integrity management framework or the anti-corruption strategy. The Department's intention was to start with implementation across a few municipalities, but it was unable to do so, hence the delay.
The other issues around the CWP had been addressed. The CWP was a very complex programme, where the government had to partner with community organisations. It was different from the Expanded Public Works Programme (EPWP), because the partnership with community organisations was to implement public employment programmes and provide a safety net for participants. Some challenges observed were that community organisations did not necessarily understand government issues, thus making implementation more challenging.
A roadmap had been added to indicate what would be required for the Department to achieve a clean audit, and this was spread through the medium term strategic framework. There was also a call to redesign the model itself, so that when the Department received the new implementation audits they would be able to define what needed to be brought to the table in order to mitigate some of the communication issues observed.
Mr Mthethwa asked how the Department planned to deal with the poor performance and administrative challenges in Programme 1, taking into account that this had been highlighted in the AG’s report.
Mr Tozi Faba, Deputy Director General: Cooperative Governance, responded on the issue of non-performance and non-achievement by the Department. It had been unable to finalise the report in a piecemeal manner, as information needed to be gathered from all provinces, and this was why it was key for provinces to submit their reports on time. On the question of the skills audit, he said that the realignment was waiting for people to be put in place. The department's IT and management were working together to solve the issues raised in the skills audit.
Mr Mthethwa asked what actions were in place in order to ensure that this issue would not happen again.
Mr Faba said that all the provinces had been written to, asking them to submit their reports on time so that the Department could compile its reports. There was only one province that had not cooperated, which led to the Department writing to them asking for cooperation. They had been told to submit quarterly reports as required, and that was now successfully done.
Mr Andries Nel, Deputy Minister: COGTA, expanded on the budget issues and the Department's way forward. The ADG had explained reasons for the budget cuts. It was important to take the Committee into its confidence about what plans the Department had for the B2B programme. It was trying to build B2B infrastructure, which required realignments, and the need for extra capacity had been identified. It had been agreed with the Treasury that R40 million would be allocated to the Department, but this had not happened. This was not to make excuses, but to make the Committee aware of the severity of the cut. The CWP programme was extremely important to the Department as it addressed poverty and the unemployment that many South Africans face.
The CWP had emanated from the second economic conference in 2007. The programme was incubated in the Presidency and was given to CoGTA in 2009 to implement and to upscale. The target that the government had set for the period of the administration was to create six million work opportunities, of which the CWP would be responsible for one million. If members examined the budget and the Medium Term Strategic Framework (MTSF) allocations, they would notice that the Department was under real threat of not being able to achieve the target simply because of the lack of funds. The programme was designed to form part of a broader social safety net. People were able to come in to the CWP and remain on the programme for as long as they needed to, by moving in and out of the programme. This was very useful, especially in rural areas, as it allowed people who worked during planting and harvest seasons to return to the programme. It was the flexibility of the programme and the fact that it was community based that informed the decision to implement it through Non-Government Organisations (NGOs). The programme was recognised by international bodies like the International Labour Organisation (ILO).
For government, the implementing NGOs were a challenge, as the government had less direct control over the programme, especially with regard to accountability. During the first cycle of implementation, between 2009 and 2011, a lot of lessons were learnt, and more was also learnt between 2011 and 2014. The Department had taken the initiative to institute forensic investigations, and specialists were invited to examine the functionality of the programme. Between 2011 and 2014, the programme was still in the control of the NGOs, which were in charge of the payment of participants, of procuring equipment and of controlling various assets. In 2014, the programme was amended to be more streamlined, and the Department took over the responsibility for paying wages. This had eliminated a lot of problems, including the double payment of participants.
The property procured during the CWP programme was government property. This was a good thing, but there were Public Finance Management Act (PFMA) requirements around asset management coming into the picture. To get NGOs to comply with the PFMA was a challenge, and this had caused very real audit problems. The programme was a good one, but because of its implementation, it posed many challenges, especially those of accountability and in respect of its audit. Further refinements to the programme were being made, taking into account the many lessons previously learnt. The contracts of the NGOs involved in the previous implementation and ownership of the programme ended in March 2016. Certain aspects of the programme were being redesigned and would hopefully be incorporated into specifications that would be useful to the new implementation agents. The amounts classified as irregular expenditure and as expenditure on goods and services, had been spent on the programme and its functions. The money was not misspent or used for private individual consumption by Department officials. It was classified as irregular because certain auditing requirements had not beencomplied with. The AG did not once suggest that the money had been stolen or misused.
The Minister said that the Department was committed to attaining an unqualified audit opinion, and on prudent management of public financial resources. On the issue of the intervention, what had triggered the Bill was the need to manage Sections 154 and 139, and the Bill had so far received a lot of commentary from various stakeholders and was currently being processed in Cabinet. There had been areas of disagreement, although not major, between DCoG and the Department of Public Service and Administration (DPSA), where the matter had been referred for a final agreement between the two. A working group had been established to deal with the issue, and progress had been made.
The CWP programme had realised its original objectives in creating an employment safety net for poor people. Apart from asset management problems, the assessments done by the Department -- before the AG or the internal committee had commented on the findings -- revealed that there were gaps that needed to be closed, one being compliance with financial legislation provisions. There had been an avalanche of findings. It had initially been started for people to be employed and not be permanently dependent on the programme, but it had been observed that people were actually not exiting it, and this had led to unreasonable expectations. This challenge would be dealt with by the Department as well as other relevant departments.
A lot had been done with the CWP, besides improving the lives of poor households. For example, there had been a lot of skills training, where beneficiaries had established cooperatives and were supplying labour to the public and private sectors. Early Childhood Development Centres had been supported as well. He suggested that the Committee visit the sites of some of the programmes in order to see the work and improvements first hand. Work was being done with the Department of Monitoring and Evaluation on COGTA’s implementation review model. It had given the Department a presentation on the assessment of the particular project, and how the model could be improved. The Department was also working with the Treasury and the AG. The new model illustrated how it could improve on issues of asset management and procurement. It was committed to sustaining the programme.
Mr Mileham said he did not dispute that the CWP was a good programme and a social safety net. However, he read out a comment by the AG with regards to the qualified opinion: "I was unable to obtain sufficient appropriate audit evidence for payments made to the CWP as the Department could not provide accurate and complete substantiated records". The problem then was not with the implementing agents, but instead it was with the Department, as they were not able to show who they had paid, when and for how much.
Throughout the AG’s report, leadership and failures from a financial management perspective were referred to. Page 130 of the annual report read as follows: "41; leadership did not exercise adequate oversight responsibility regarding the financial body reporting and compliance, 42; leadership did not effectively monitor the time recommendations of action plans, 43; management did not implement proper record keeping, 44; management did not implement effective controls for the daily and monthly for processing and reconciling transactions, 45; management did not prepare regular and accurate financial reports, 46; management did not appropriately review regulations". The fault was not with the implementing agents, but with the Department.
Mr Mileham said there was no mention of the performance in the annual report with regard to the Provincial and Municipal Government Support programme, and nothing in the targets outlined was related to provincial support. He asked what had been done to support, monitor, evaluate and oversee provincial governments, as this was not shown in the annual report. Again in Programme 5, there was a mention of the local government skills institute being removed from the APP because it was found to be duplicated with the Local Government Sector Education and Training Authority (LGSETA), the School of Governance and SALGA. When the APP was presented to the Committee, the Committee had highlighted those issues, saying that there was a duplication with other already existing initiatives. In the APP, why was this not mentioned?
In Programme 6, it was stated that the Department was to assist municipalities to provide access to services. Only three of 27 assessments had been completed, so the question was, what were the Department's capacity constraints, when would the rest of the assessments be completed, and could the Committee get a copy of the findings of the assessments that were completed? There were also a number of indicators which were to be handed over to the Municipal Infrastructure Support Agent (MISA), and the target had been reduced when they were handed over. Why was the target reduced? What had changed for the target to be reduced?
Mr Mudau commented that the Department was not doing badly, if one was to exclude the CWP. It could not state that it had shifted finds towards FeesMustFall, because it showed that it was unable to handle disaster funding decisions. With the concern raised around the CWP, it had been mentioned that some NGOs did not understand their role in implementing the programme, and if this was the case then these NGOs should not be appointed again to work on the programme.
Mr C Matsepe (DA) said the Department had stated that the guidelines on the titles and responsibilities of office bearers and the delegation framework processes were set out to be achieved. It had put in the work, but it appeared that the office bearers were to blame for the delays in the implementation. Consequently, what had the Department planned in order to reinforce performance?
Mr Mthethwa asked how the issue of people involved in the CWP not being paid had been resolved. Since it had taken over, who was to oversee the Department if they were not performing up to an adequate standard? Looking at municipalities and helping them to provide services, were there any provinces still struggling to implement their B2B?
Mr Sigidi responded on the issue of the Provincial Municipal Government Support (PMGS) programme. The intention of the programme was to support provinces for them to implement some of the programmes that they had to implement. The first thing had been to look at provinces in terms of the Municipal Structures Amendment Act, in order to be able to support the municipalities, as the function of supporting them was initially under constitutional development. However, currently the Department did not have the capacity to support the provinces with this programme.
The issue of Programme 6, where there had only been three assessments out of 27 carried out, what had happened was that when the assessment was done in Amathole, it was realised that the report had taken longer than had been expected. The report was very extensive, and it was then realised that not all 27 assessments could be achieved, so only three had been completed. These reports could be presented by the Department and MISA at a set date if the Committee wished.
Dr Simphiwe Mngadi, Acting National Manager: CWP, responded to the question relating to the payment of participants and whether there had been changes since the Department took over the payment of participants. He said there had been changes, as prior to the Department taking over the responsibility there had been a lot more complaints. There were incidences of some payment challenges, such as payments not going through. Even though the Department was responsible for the actual transfer of the money, it was still very much dependent on the administration of the process. The administration was noted to have sometimes fallen short in capturing ID and bank details incorrectly, which had resulted in participants not being paid. The extent of this challenge had been reduced since the Department took over. It had focused on improving its record keeping mechanisms and systems, as well as documents management. It had begun using a system of biometric participant identification, which enabled it to keep up to date records and ensure that the wages for participants were actually paid to them. He gave the Committee examples of good CWP projects being carried out in Keiskammahoek in the Eastern Cape, and Erasmus outside of Tshwane.
Mr Sigidi responded to Mr Mudau’s question. The Department had identified some of the weaknesses and a new framework had been put forward. It would look into lessons they had learnt and use them in the implementation of training programmes for the new implementing agents, so that there would be no duplication or repetition. Action had been taken against the implementing agents who had failed to indicate where the assets were. Payments for the implementing agents had been delayed, and Department had managed to recover some of the assets. He pointed out that if payments were stopped for the implementing agents, then the organisation would be disadvantaged. The actions taken were to delay some of the payments to the agents.
Ms Dorothee Snyman, Chief Financial Officer, commented on the AG’s findings, particularly those related to the qualifications and other financial management findings. The Department could have done much more. However, part of the qualifications on goods and services was related to the project management fees of the implementing agent. This was all related to the claims and source documents that substantiated the documents. For the first time, the CWP’s financial assets were disclosed in the 2015/16 financial year, and the Department had also been required to restate its comparative figures for the 2014/15 financial year, which had led to changes being amended in the financial statements.
Mr Fosi replied to question on the issue of municipalities struggling to implement regulations. In its assessments, the Department had observed uneven performance both at the provincial and municipal level. It was working with the Department of Public Service and Administration (DPSA) to look at the capacity of the provincial competency. Being looked at were issues of structure and performance as a way of trying to develop a uniform approach in getting departments to do what they were supposed to do. It had been proposed that a comprehensive assessment should take place, looking at the state of each municipality and developing new B2B action plans, recognising the need for new administration in the municipalities, and the municipalities would be given a new five-year tenure of local government. It was important for local government to focus on the developmental agenda as well as the B2B, as this would help in achieving developmental outcomes.
Mr Sigidi replied to the comment related to Mr Matsepes question on the responsibilities of office bearers. He said that when councillors were being trained, they were also trained on the rules and regulations of office bearers, so this activity was part of the broader councillors’ plan that had already been finalised, where the Department had participated along with SALGA, the local government SETA, as well as the School of Government.
The Minister stated there were challenges with regard to the Department's capacity to monitor and support implementation. As part of dealing with the problem, it could perhaps outsource the responsibility, but at some stage it would have to be involved to ensure that leadership was provided from the Department's side.
Mr Mileham commented that Mr Sigidi’s comment on the Minister’s decision to reprioritise funds with regard to provinces was 'quite telling'. This was because it was the Department's key function was to oversee, manage and monitor provinces, and a constitutional requirement to do so. It was part of its job to oversee provinces, so when was this going to be done, because there were at least four dysfunctional provinces -- Limpopo, North West, Mpumalanga and the Eastern Cape. It was the Department's role to oversee and provide support and assistance, monitoring and evaluation to these provinces.
In the financial report’s reference to provinces’ procurement and contract management, it had been concluded that supply chain management (SCM) in the Department was problematic. What was COGTA doing to address this? In the annual report, it was noted that the financial statements had not been submitted, and that was inexcusable. The Department's expenditure was up by 15%, more than the rate of inflation, despite the budget cuts. The areas of concern were the increase in wages and salaries, compensation of employees, goods and services and consumables suppliers. Consumables had gone from R4.5 million in 2014/15, to R122 million in 2015/16. What was the breakdown of the spending? Outsourced and legal services were also areas of concern. Why was the expenditure on disaster management under-spent, given the severity of the drought on the economy, livelihoods and municipalities? If a drought affected more than one province, then it should be declared a national disaster so that funds could be released.
Mr Mileham said the municipal grants had been under-spent, while there were municipalities with dysfunctional IT and billing systems, and some not able to pay their bills. Thabazimbi had been under the Department's administration for more than nine months, and the day after the elections it was reported that a sheriff had walked in and taken away the computers. It appeared that the Department's priorities were wrong, given that there was under-spending within the municipal grant despite the many issues faced by municipalities. What was being done to address the situation?
Mr Mthethwa asked how the issue of drought was being dealt with. Which were some of the provinces experiencing severe drought conditions and their consequences?
Mr Sigidi responded on the issue raised on provinces. The Department had previously been called the Department of Local and Provincial Government (DPLG) and even at that time, it did not have the capacity to deal with provinces. If one had followed the transition and developments around local government, a policy had been developed to deal with issues around provinces, but this policy could not be implemented. The Department should have had a chief director in place to focus on provinces, but this had not happened. There were challenges with regard to the implementation of the CWP. There was a focus on three provinces in the implementation of the CWP, so the Department had had to choose between the provinces or the CWP. It had been a matter of choice, and not a matter of saying that provinces were not of a priority. Work had been done by the B2B team, focused on provincial CoGTAs.
Mr Ken Terry, Head: Disaster Management Centre (DMC), COGTA said that funds had been spent in the previous year on disasters such as hailstorms and other disasters that had occurred in that period, but which were not recorded. Approximately R1.8 billion was spent on the drought in the previous financial year. The Department was able to make funds available to deal with requests that had come in. In the current financial year, funds were made available in the agricultural sector to help towards mitigating the effects of the drought. None of the provinces had been declared as disaster management spots, but from the national level the drought was still a major concern and the Department was committed to picking up the identified consequences of the drought. Water was a problem, as reservoirs were drying up, and there was a struggle with groundwater processes, as drilling had become more difficult because of the drying up of water. The North West and the Free State, from an agricultural perspective, had received rain and there was the prospect of improvement from the previous year.
The Department of Water had imposed strict constrictions on water use, and these had been enforced effectively. It had been indicated that South Africa should expect normal, to higher than normal, rainfall. The maximum temperature was decreasing, and this was a good indicator. Another issue raised at the drought indaba concerned guarantees for commercial farmers, to make sure that they were able to put their crops into production. The Department of Agriculture had put money aside to secure guarantees for farmers to be able to plant their crops. Predictions were that approximately 70 million tonnes of maize would be imported into the country, so the aspect of food security was improving and better than anticipated. The DMC met on a monthly basis and had task teams in place to ensure that there was adequate support with regard to drought management.
Ms Snyman said a large part of the Department's irregular expenditure was linked to procurement processes involving implementing agents, but it had managed to deal with some of the challenges. A standard procedure on contract management had been rolled out to ensure improvement in the future. The SCM policy was reviewed, in line with the Treasury’s performance standards. Regarding financial statements not being submitted in accordance with requirements, as soon as there were missing financial statements in the Department, this was noted as a general AG finding. It was part of the AG’s standards, and was applied to other departments as well. With regard to the 15% expenditure increase, the budget for 2014/15 had been R242 billion, and now there was an increase in the budget. The breakdown of consumables’ expenditure could be provided, if requested.
The Deputy Minister responded on the question of provinces. CoGTA had a mandate around cooperative governance, which included the relations between local government and the provinces. This addressed the fact that CoGTA was in charge of administering the Intergovernmental Relations Framework Act. He emphasised that its focus was on implementing the B2B programme and making sure that municipalities were supported to function properly. It was important for provinces to adopt the B2B programme, to set up joint B2B task teams and to make sure that CoGTA provincial departments were aligned so they were in the best position to support municipalities. The Department had decided to focus on where the priorities were at the moment and where limited resources were to be allocated. The increase in the expenditure items mentioned had gone to the CWP, so it was not correct to create the impression that the Department had gone on a spending spree on irrelevant issues.
Mr Mileham commented that on 8 September 2016, the Minister had issued a statement on drought. At that time, the South African Weather Service had said that the drought was persisting and had affected eight provinces. For the department to claim that the provinces had not been declared as disaster areas was problematic. Water restrictions and water demand management was a massive issue in municipalities across South Africa, and the problem was not going to go away any time soon. On the one hand, the Minister said eight provinces were disaster areas and that drought was persisting according to the South African Weather Services, and on the other hand the Head of the Disaster Management Centre said that the drought was not that much of a big deal as it had been made out to be. Dam levels were down from the previous year, so the drought was getting worse, and until rain fell the situation needed to be better managed.
The Minister replied that the situation was being managed. The Inter-Ministerial Committee task team on drought felt there had been no need to declare a national disaster because of the ramifications that went with such a particular declaration. The Department still had enough resources to deal with the drought. Affected provinces were being attended to. The situation was being monitored closely, and the Department was working with municipalities to make sure that water was being used efficiently.
Department of Traditional Affairs (DTA): Annual Report
Dr Muzamani Nwaila, Director General: Department of Traditional Affairs (DTA), presented on DTA. He said it had three outcome-orientated goals. The first goal was for a transformed, functional, accountable and sustainable institution of traditional leadership. The strategic objectives for the goal included the promotion of socio-economic and cultural development within traditional communities, to increase the number of functional structures of traditional leadership and to facilitate collaborative relations of the institution of traditional leadership with the three spheres of government, civil society and the private sector for improved service delivery and socio-economic development within traditional economies.
The second goal was to create stable and cohesive traditional communities. The strategic objective for this goal was to promote peace, stability, culture, heritage and cohesiveness of traditional communities.
The third goal was for a community-focused, development-orientated, efficient effective department that complied with legislation and good corporate governance principles.
In promoting peace, stability, culture and heritage and cohesiveness; the performance target had been to have traditional leadership guidelines for two kingships/queenships endorsed by the kingships/queenships, and this was achieved. The second target was to resolve 10% of disputes lodged before 31 March 2015 resolved, and this was achieved. The third target, for a 1% increase in the number of traditional communities with cultural and heritage projects that advanced social cohesion, was not achieved. However, information had been gathered and there was a baseline already in place for 2016/17. The third target, to have one national project in the Heritage and Cultural Promotion Strategy Implementation Plan, was achieved.
For the strategic objective concerned with developing, reviewing and monitoring the implementation of traditional affairs policies, the target was to have one Bill initiated, and this was achieved. In future, this would assist the Cabinets in different provinces.
To increase the number of functional structures of traditional leadership by 31 March, the annual target was to have 33 functional traditional councils, and this was achieved. A target was set to have eight traditional courts monitored in documenting, recording and filing decisions with the clerk of magistrates courts. The Department worked closely with the department of trustees, providing training to people who dealt with traditional courts, and did checks on whether the training was being implemented effectively. The target to have two houses of traditional leaders comply with the Promotion to Access and Information Act (PAIA) was achieved.
The target to have two partnerships with the Department of Mineral Resources and Anglo Plats functional and beneficial to the North West and Limpopo traditional communities, was not achieved as only one partnership was implemented. The one with Mineral Resources was delayed and thus could not be finalised.
The 10% reduction in initiation fatalities target was not achieved – instead, deaths from initiations increased by 10%. The Eastern Cape faced difficult challenges on this aspect. Because of the criminalisation and the commercialisation of existing initiation schools there was a huge threat to initiates’ lives despite the efforts of the structures and the support provided by various stakeholders. In promoting safe and healthy initiation practices, the HIV and AIDS prevention support project had been implemented in collaboration with the Department of Health and the South African National AIDS Council (SANAC). This target was achieved. The implementation of the project in the National House of Traditional Leaders (NHTL) programme for socio-economic development of traditional communities was achieved and set out in various provinces.
In total, 78% of targets had been achieved and 22% were not achieved in 2015/16.
Reporting on the Department’s financial performance, he said the final appropriation was R125.9 million, and as payment for capital assets had recorded a variance of R549 000, total spending represented 99.6% of the budget. The reason for under-spending on the payment for capital assets was the cancellation of a procurement contract for the installation of filing cabinets. The DTA had awarded the contract to a company which was liquidated prior to delivery.
The DTA had complied with the provisions of Section 40 of the PFMA. Overall, it had received an unqualified audit opinion from the AG on both the financial and performance information. According to the AG, the audited annual financial statements fairly presented the financial position of the DTA and the financial performance and cash flow for 2015/16.
Issues had been raised on the DTA’s irregular expenditure. It had incurred irregular expenditure to the value of R4 million, which had been disclosed in the AFS, mainly relating to legal fees. The expenditure was from 2010, when a team of legal experts had been assembled to try to deal with litigation involving the DTA over the kingships. This issue had been rectified in November 2015 by the state attorneys, and would not carry over into the next financial year.
Mr Mthethwa asked how the DTA had planned on addressing the 344 outstanding disputes that it faced. He said that a lot had been done with regard to initiations, and it was surprising that illegal practices were still taking place. When was criminalisation going to be implemented? Deaths were not supposed to happen, especially as the government had put many plans in place to ensure they did not happen. For those commercialising the initiation practice, what were the consequences? Had people been criminally charged? Mr Mthethwa asked for clarity regarding the R4 million in irregular expenditure, and whether it had been rectified or not.
Mr Mileham said the DTA’s costs for administration had increased from R21 million in 2014/15, to R31 million in 2015/16. The compensation of employees in the Ministry was R163 000 in 2014/15, but in 2015/16 it was R4.69 million -- that was four times more than in the previous financial year. Similarly, the compensation for employees in corporate services had risen from R1 437 000 to R6 384 000. There were massive increases in the expenditure for the compensation of employees. Mr Mileham requested for an explanation for this.
Expenditure on fleet services had risen from R192 000 to R414 000, and advertising had gone up from R75 000 to R323 000. The concern was not about the increases, but rather about why they were so massive, as they seemed disproportionate. The expenditure was not for programmes that resulted in outcomes for the Department, but was instead for administration and the staff.
He also raised concern around the assets, which had decreased from R13 378 000 to R5 703 000. It appeared that the bulk of the decrease was in cash and equivalents. Why was there a decrease recorded in the balance sheet?
There were two indicators that were problematic. Seven out of ten audits had not been done, which showed a lack of will from the DTA to conduct internal audits. Looking at the initiation deaths, which was said to be an area of major concern, the comment from the DTA with regard to the increase in deaths had been: "inadequate regulatory framework to criminalise certain activities by the practice within the customers’ initiation practice, which resulted in death of initiates". It was the DTAs job to put forward a regulatory framework. Legislation was known to have been started, but the Committee had not received it yet. When was the legislation to be presented to the Committee, and what else was being done by the DTA to ensure that initiates were protected and did not die at initiation schools?
Dr Nwaila responded that the Commission was responsible for addressing the 344 outstanding cases in the disputes with the DTA. With regard to criminalisation, there was a policy that had gone to Cabinet and it had been approved. The DTA had asked Cabinet to assist it in developing a bill. The bill had been finalised, but needed to go through the Cabinet processes before it was sent Parliament. In the bill, there was a mention of illegal initiation schools, but it had been noted that there could not be any illegal schools because there was no law which separated the legal schools from the illegal ones. However, nationally there was the Children's Act, the Constitution and the Bill of Rights, and these were acts to protect children and initiates, although none of them criminalised the practice. It was hoped to have the bill in Parliament soon so that it could be implemented. There had been a number of arrests and prosecutions, including medical doctors, as they assisted traditional practitioners. The medical doctors interrupted certain customs, and thus did not carry out certain procedures and laws, which had then led to some children dying. There had been quite a number of arrests in different provinces. The South African Police Service (SAPS) worked with the DTA on the cases and kept the DTA updated. The biggest challenge was the refusal of parents to stand as witnesses because of fears of possible victimisation. The DTA had created a hotline for parents so that if they feared going to the police, they could contact the hotline.
After the R4 million irregular expenditure over the kingship issue had been explained to the state attorneys, they had been asked by the DTA whether they had the capacity to take over the remaining cases in court, to which the attorneys had replied that they did not have the capacity. It had been found that no loss had been incurred through the DTA using private attorneys over the years.
Regarding what else was being done to address the issue of the death of initiates, many other things were being done. This involved the Department of Health being on standby. In Limpopo for example, there were minimal fatalities reported because the initiates mostly went to one school, so it was easy to intervene there. In comparison, the Eastern Cape schools were different, in that they were family matters and the initiates did not all attend one single school. The Ministry had written to the traditional leaders and parents, advising them that they would be held accountable.
In the Ministry's budget, the DTA did not have a Deputy Minister responsible for general affairs. From 2014, the Minister was responsible for Traditional Affairs. The CFO would to go into further detail. The increase in corporate services was due to the fact that the DTA had not had staff. The internal audit was comprised of only one person, which meant the DTA had 100% capacity. Posts had been advertised in order to try to help the Department to achieve the outstanding targets, particularly in the current financial year.
Mr Matsobane Aphane, CFO: DTA, responded with regards to the expenditure. The DTA had become autonomous in 2014, meaning that for 2015/16 it had had to complete its own financial statements. However, for the larger part of 2014/15, DoCG had been transacting on behalf of the DTA. The expenditure had therefore been taken out on the DoCG side while the DTA’s system was being set up. The actual expenditure in the Ministry had skyrocketed because of the costs between the two departments. The costs would be claimed on an intergovernmental claim. The expenditure recorded for 2015/16 did not include all the claims DoCG was supposed to have made from the DTA, meaning that for 2014/15 most of DoCG’s expenditures were still listed in the DTA’s books.
The assets had increased. For 2015/16, the assets transferred from the DoCG to DTA had been acquired, thus increasing the DTAs assets.
Mr Mileham noted the CFOs responses regarding the transition from the DoCG to DTA. He said this needed to be rectified and reinstated for the 2014/15 financial year so that the figures were an accurate reflection of the DTA and could be compared with the 2015/16 financial year. Secondly, the annual report showed a decrease in assets, and not an increase of 60%. The DTA claimed to have bought vehicles and equipment, but yet their assets had reduced by 60% -- why and how was this the case?
Mr Aphane addressed the issue of the reinstatement. The government operated on a modified cash basis system of accounting. Treasury had been approached by the DTA, and they had responded that there was no need for the DTA to have a comparative figure. The transferred expenditure was accounted for, so in the following year, DoCG had lodged its claim. During the 2014/15financial year, the cash and cash equivalents included more than one item. The amount had been reduced. There had been cash in the bank, and R4 million of that had hadto be surrendered in the previous financial year. However, in the current financial year only R2.7 million was to be surrendered. Because of timing, if payment was made on 31 March, then the money had left the books, but the money had remained in the cash in the bank -- the DTA’ss account – so it was dispersed only in the following financial year. The R2.7 million was the remaining cash in the bank and outstanding payments.
Integrated Urban Development Framework (IUDF): Progress report
Mr Themba Fosi, DDG, COGTA, said the implementation plan of the Integrated Urban Development Framework (IUDF) looked at the following:
- issues around the alignment of the 2019 MTSF priorities;
- strengthening and improving collaboration in planning and delivery mechanisms;
- acknowledging and adhering to the hierarchy of plans and sticking to agreed plans;
- differentiating between types of cities and towns and their roles in the national space economy;
- providing opportunities for non-governmental stakeholders to co-create and contribute to solutions.
The IUDF’s priority actions for the 18 months were focused on the following:
- implementing strategic interventions in the identified intermediate, medium and small towns to strengthen planning, governance and economic development, in line with the B2B programme and existing strategic government programmes;
- piloting and implementing models to improve integrated planning in intermediate (secondary) cities;
- developing spatial contracts for key restricting zones in metropolitan municipalities and intermediate cities;
- releasing the acquisition of state-owned land key for spatial transformation; and
- ensuring alignment and coordination between various Strategic Integrated Projects (SIPs) and other strategic initiatives impacting on urban spaces.
In terms of progress, the DTA had made the following progress:
- there had been continuous engagements with various stakeholders to publicise the principles and priority actions of the DTA;
- work had been done with the World Bank and the Treasury to develop a comprehensive support programme for intermediate cities; phase 1 of the project included a detailed diagnostic analysis for supporting spatial and economic development in the Polokwane and Umhlathuze municipalities;
- there was the proposed redesign of the Municipal Infrastructure Grant (MIG) conditions in order to incentivise and support the IUDF by offering more flexibility on the grant conditions to support IUDF principles;
- spatial contracts were piloted in three key municipalities -- Ekurhuleni, eThekwini and Nelson Mandela Bay -- and lessons learnt from these were to be extended to other municipalities.
- there was a request for provinces at the last President's Coordinating Council (PCC) meeting to identify three municipalities per province for targeted support
- there had been alignment with other key government programmes, working with Limpopo and other stakeholders to facilitate integrated urban planning in the Musina/Makhado Special Economic Zone (SEZ)
- Bushbuckridge local municipality had been supported to finalise the Bushbuckridge Urban Renewal Plan, strategic projects and resource mobilisation.
The DTA said the IUDF and the 2016-2019 plan had been well received by various stakeholders. The success of the IUDF was dependent on collaborative planning resource allocation and coordinated implementation between the three spheres. There had to be stronger collaboration between offices of the Premier and the provincial CoGTAs to ensure alignment of sectoral plans and capital investment, in line with the IUDF principles. The national CoGTA needed to mobilise national support and facilitate sectoral alignment, while provincial CoGTAs should support horizontal alignment at the municipal level.
Finalising transition measures in newly established municipalities: Progress
The Chairperson asked about COGTA’s programme for Local Economic Development (LEC), as it appeared that the local authorities were not utilising the resources. The Integrated Urban Development Framework could assist in this regard. Municipalities had money that could go towards LEC, but it was not being used effectively. How was the IUDF going to change the way things had been working all along?
Mr Nel, Deputy Minister, responded that the IUDF had been adopted and was being implemented, but implementation was quite complex. The role of the Parliamentary oversight was important in that regard. The Committee could take the initiative to organise one or a series of joint meetings with other relevant Portfolio Committees on the issue, because urbanisation was a socio-economic phenomenon not limited to COGTA. The other stakeholders would be from the economic sector, the social sector and even the security cluster. The United Nations (UN) Habitat III was to take place on 17 October 2016 in Quito, Ecuador and South Africa would send two delegations to the conference, where at issue would be the adoption of a new open agenda that had come out of the Sustainable Development Agenda (SDG). A feedback report from the UNHabitat III conference would be appreciated. 31 October was World Cities Day, and maybe the Committee might consider if it wanted to do something around that.
The Department had put emphasis on LED, and it did not make sense to talk about it in the abstract as it needed to be anchored on the context of the B2B programme, because a municipality that did not get the B2B right could not support LED.
The Chairperson agreed to the suggestion of having joint committees engaging on the issue of urbanisation. It was suggested that maybe the Committee could find time in 2017 to discuss the matter. Urbanisation was not undertaken as a choice -- it was happening and still going to happen in future, and so planning for it was key. Urbanisation also had the potential to contribute towards creating work and employment opportunities.
Dr Naidoo, Executive Manager: COGTA said that in 2013, the Municipal Demarcation Board (MDB) had confirmed the outer boundaries of municipalities, and among those there were minor and major redeterminations. Minor were technical readjustments around municipalities, of which there were at least 142. Among provinces, Gauteng had one minor redetermination, while the Western Cape had 35. In looking at the major redeterminations, Gauteng and KwaZulu-Natal were most affected. In Gauteng, Randfontein and Westonaria formed the new Rand West City municipality. In KwaZulu-Natal, Ntambanana, Mthonjaneni and Umhlathuze formed Mthonjaneni and Umhlatuze; two municipalities were formed, with a reduction of one. In the Northern Cape, Mier and Khara Hais were joined to form Dawid Kruiper municipality. In Limpopo, Aganang was disestablished, and portions of it went to the Polokwane municipality. Mutale was disestablished in Limpopo. In the Eastern Cape, Gariep and Maletswai formed the Walter Sisulu municipality. Inkwancs, Tsolwaba and Lukhanji formed the Enoch Mgijima municipality. IKwezi, Bavuaans and Camdeboo formed the Dr Beyers Naude municipality. There was a total reduction from seven local municipalities in KZN, six in the Eastern Cape, and one each in the rest of the provinces. There was a total reduction of 21 municipalities across the country, which totalled 257 municipalities.
The role of the province was said to be important, with a focus on Section 12 and Section 14(5) of the Structures Act. For Section 12, it was noted that the Member of the Executive Committee (MEC) for the local government in province must establish a municipality in each municipal area which the MDB demarcated in the province. Section 14(5) provided for measures that the MEC could put in place to provide transitional structures to oversee judicial processes.
As part of the department's tracking of progress in newly determined municipalities, matters related to legal matters were identified, as well as matters related to human resources, finance, technical , communications, integrated development plans (IDP) and institutional issues.
In the Rand West City municipality, there had been pressing matters related to human resources. Umdoni had issues around finances. The Big 5 Hlabisa municipality had issues around human resources, finances and legal matters. Alfred Duma had issues around technical matters. Dr Nkosazana Dlamini Zuma had issues around human resources. In Mbombela, it was believed that more could have been done by effective stakeholders and communities. In Manguang, there were matters related to human resources. In Limpopo, there were formal issues around communication in Molemolle. Modimolle also had communication issues. Thulamela, Makhado and Collins Chabane also had their issues. In the Eastern Cape, there were general issues around all the new municipalities.
Progress had been made by all provinces in the identified key focus areas. The general challenge was around finances. One of the challenges reported was the concern related to addressing historic debt inherited from the previous municipalities. Another challenge was the placement of staff, as objections had been lodged and there had been expectations of salary increments/equalisation in higher grade municipalities. There was also a challenge on the expectation both from officials and councillors, that because the jurisdiction of municipalities had increased, then remuneration should also be increased.
Prior to the elections, the Department had issued circulars to provide support to Change Management Committees (CMCs) on a number of challenges, in particular Circular 29, which dealt with issues faced by municipalities both pre elections and post elections. Circular 35 was also issued. COGTA had established the Municipal Demarcation Transition Committee, which dealt with challenges and shared practices from other provinces. The provincial B2B coordinators’ support was made available to leverage relevant expertise/capacity from the national department and from the other stakeholders, to make sure that challenges were addressed.
The Treasury, it had issued Circulars 78 and 79 on the Municipal Finance Management Act (MFMA). There were also the Municipal Finance Improvement Programme (MFIP) II advisors in place who were available to all affected municipalities in the Eastern Cape and Limpopo. There was participation in the CMCs at both the local and provincial levels by SALGA. There was a major redetermination that took place in the Eastern Cape and Limpopo. These provinces needed the most support; the department had convened discussions with both provinces towards the end of May 2016.
The Department had asked the Treasury to assist with finances. For 2016/17 and 2017/28, an amount of R409.3 million was appropriated for the Municipal Demarcation Transition Grant (MDTG), which had replaced the R139 million that had been identified in the previous financial year. R297.4 million would be made available in the 2016/17 financial year, and the balance of R111.9 million in the 2017/18 financial year. At the local government MinMEC meeting held in May 2016, MECs requested that the MDTG transfer be made earlier than November in order for the pre-election municipalities to defray expenditure being incurred. The Treasury had agreed and settled on a 40:60 split for the pre-election municipalities and post-election municipalities, respectively. It was advised that ten pre-election municipalities in the Eastern Cape and three in Limpopo should not receive the MDTG, and instead they were to receive the full amount towards the end of November.
Mr Mileham asked how many of the Section 12 notices were not achieved, and which provinces had been affected. Why had the MDTG been withheld in the Eastern Cape and Limpopo, and which municipalities were affected? Why was there no mention in the IUDF presentation of Spatial Planning and Land Use Management (SPLUM)? SPLUM played an important role in spatial planning and land use management, but it was not mentioned. How would the Department plan on integrating the IUDF with SPLUM?
Mr Mudau asked the IUDF draft was aligned with the NDP, in particular for the Western Cape, KwaZulu Natal and the Eastern Cape.
Dr Naidoo responded that all provinces had Section 12 notices in place, and they could be forwarded to the Committee on request. On the MDTG, in the Eastern Cape there were concerns around iKwezi, where there was a risk as the money could be misused. Therefore, instead of the transfer being made before the elections, it was made after the elections.
Mr Fosi responded on the issue of SPLUM, saying that spatial transformation was required in recognising all the key instruments highlighted in the IUDF. The reference to spatial development framework (SDF) municipalities, integrated development plan (IDP) municipalities, and the spatial analysis by various stakeholders, including provinces, was recognised. All instruments were said to flow directly from the SPLUM, even if there was no specific reference to the SPLUM legislation. The instruments dealt with for local government recognised the SPLUM.
The Deputy Minister commented that the issue of SPLUM was vital. If one looked at Chapter 8 in the NDP, it spoke of SPLUM and spatial planning, and it identified that the weakness in responsibility for spatial planning was dispersed in many instances. There were discussions between COGTA, the DPME and Rural Development on land reform, and SPLUM was put on the table. It was to be transferred to the Presidency and to DCoGTA. Once the programme was on course ,then the Committee would be debriefed on the progress.
Ms Mthembu commented that she welcomed the initiative by the Deputy Minister to have further discussions on the issue of SPLUM. She was concerned about the provinces’ implementation of the IUDF. The newly elected councils would be busy with their IDPs. Was the IUDF integrated in the IDPs? Were the provinces responding positively to the implementation, and was it taken seriously?
Mr Mileham said that with SPLUM, a mindshift would be required from municipalities in order for the policy to work. From a DCoGTA perspective, municipalities and councillors needed to be capacitated on the implementation of SPLUM
Application of Section 139 of the Constitution: Status report on municipalities
Mr Tshepo Khasi, Senior Manager: COGTA, said that Section 139 (1) of the Constitution provided that when a municipality cannot or does not fulfill an executive obligation in terms of the Constitution or legislation, the provincial executive may intervene by taking any appropriate steps to ensure the fulfilment of the obligation. This could be invoked by issuing a directive; assuming the responsibility for the relevant obligation; dissolving the municipal council; or invoking sub-sections that dealt with the non-fulfilment of financial obligations.
The interventions were categorised in terms of the four B2B pillars, which were governance and putting people first, financial management, service delivery and capacity building. The issues involved in these categories were:
Governance and putting people first:
- political in-fighting and political management;
- councils’ inability to perform as required by legislation;
- poor leadership and oversight by councils, conflicts between top management councillors;
- allegations of nepotism and corruption;
- non-compliance with rules and regulations.
- financial non-viability;
- lack of adequate systems and capacity to effectively manage the financial situation;
- municipality not raising sufficient revenue due to poor budgeting, poor tariff policies, weak billing systems, poor infrastructure management;
- lack of internal control;
- fraud and misuse of municipal funds due to lack of risk management and lack of credit control.
- municipality were not stable and were not providing quality services to their communities;
- sections 152/153 of the Constitution clearly set out the service delivery obligations of municipalities and those not met;
- in certain instances, services were not provided in a sustainable manner;
- tariffs were not cost reflective -- there was little or no spending on repairs and maintenance, resulting in distribution losses or services not rendered.
- lack of capacity in administration;
- non-performance of top management;
- lack of proper organisational structure and vacant posts in management positions;
- high vacancy rates and high levels of incompetence among staff
The provincial intervention breakdown for 2015/16 was outlined. The Eastern Cape had one intervention, the North West had 11, and both Limpopo and the Western Cape had one. This amounted to 15 inventions. All interventions were approved by the Minister and the National Council of Provinces (NCOP) to remedy the shortcomings endured by the institutions. The triggers for the interventions had been a combination of failures by municipalities in respect to all the B2B pillars.
During the period under review, and on the eve of the local government elections, two interventions which took place in the North West and KwaZulu-Natal, and three in the Tswaing and Ventersdorp local municipalities were disapproved of by the Minister. The main reasons for the disapproval were that the timing of the invocation would cause instability in the municipal councils, as it had been just few months/weeks before the elections on 3 August. After that date, five municipalities were still under intervention. LekwaTeemane, Mahikeng and Ditsobotla local municipalities in regard to the Municipal Property Rates Act in the North West, KwaZulu-Natal and Limpopo.
The provincial departments of COGTA had established intervention steering committees, in which the administrators, the DOCG and sector departments reviewed progress of the interventions. The Committees also at times visited the municipalities to monitor progress as reported by the administrators
As a condition to the approval of the interventions, the MECs were also required to submit quarterly progress reports to the Minister, in line with the five B2B pillars. The total number of municipalities subjected to Section 139 since the advent of the Constitution was 100.
The key observations on interventions were:
(a) The limitation of Section 139 (1) regarding the "failure to fulfil an executive obligation" led to difficulties in interpreting what constituted the 'executive obligation, and under what circumstances interventions were permitted.
(b) There was little indication that the provincial legislatures exercised oversight over the provincial Executives' actions in regard to section 139 interventions.
(c) The district municipalities had never been allocated any role to play in interventions, and they had always become passive participants in those circumstances.
(d) There had been a lack of targeted monitoring, oversight and support mechanisms before the invocation of an intervention -- for example, an early warning of performance disputes to avert the need for an intervention.
(e) The effectiveness of the interventions could be questioned in terms of the intended outcomes; were the interventions curative or were they simply temporary takeovers, for instance, with ulterior motives or without the necessarily skills transfers, or meeting the objectives set for the interventions?
(f) Provinces had not been able to submit regular reports, nor the final close up reports once the interventions have been revoked, for the purpose of monitoring the effectiveness of the interventions.
(g) The communities subjected to interventions in the municipalities had often not been informed, particularly where the municipal council voted into office by them was now being subjected to dissolution in terms of Section 139 of the Constitution.
(h) During interventions, more often than not there was resistance and obstructionist tendencies from the officials, to the extent that there was not the required cooperation. At times, this bordered on illegal activities such as destroying documentation and issuing illegal instructions to other municipal officials.
(i) The intervention mechanism could be used outside the scenario of total collapse. More targeted interventions were possible than taking over of the whole municipal administration. This had been the case in Newcastle, KwaZulu-Natal, where the municipality's water servicing provision function had been taken over by the province.
(j) Some of the interventions took a long period, sometimes exceeding four years, before they were revoked by the provincial executive.
(k) Sometimes the Provincial Executive Council (PEC) would invoke an intervention at a given municipality, running for a period of six months to a year or more, and later terminate it. Then, after several months or a few years, the same municipality would be subjected to another intervention by the PEC for reasons similar to the previous intervention; an example of this was Mahikeng, where it had happened twice.
(l) More often than not, the provinces did not issue the 'directive' in terms of Section 139(1)(b), or were at least not part of the documentation for review by the Minister and/or the NCOP.
(m) Provinces tended to interpret the invocation of Section 139 of the Constitution differently from each other, despite national guidelines being in place;
(n) During the interventions, more often than not there was resistance from the accounting officer, and this frustrated the whole project when resources were not made available by the accounting officer;
(o) The Constitution did not prescribe the following:
(i) the time period within which a municipality could be subjected to an intervention, in particular in terms of Section 139(1)(b), for example, with the current interventions in Mkhanyakude and Thabazimbi,
(ii) the type of recourse and/or interventions in instances where a municipal council failed to constitute itself to elect office bearers after the local government elections, and
iii) whether an intervention was uplifted after the local government elections.
The recommendations were that the Portfolio Committee take note of the current status of the interventions in terms of Section 139 of the Constitution, and that it support the process of the development of the Intergovernmental Monitoring, Support and Interventions Bill, to assist in alleviating the challenges and observations associated with the invocation of Section 139 of the Constitution.
Mr Fosi commented on the situation in Thabazimbi. The municipality in Thabazimbi had been experiencing serious challenges in its administration and management, and added to that was the fact that the municipality was unable to honour its financial obligations. The issue had started a while back, but it was triggered by the illegal promotion of officials to senior management, which had caused the municipality to face serious financial management challenges. The municipality was said to owe creditors R400 million. There were approximately 14 creditors, including Eskom. With the new administration, the municipality had written to the Department asking for support. The Department was working with the Treasury to offer a Section 154 support package, as this had been approved by the provincial Executive Officer.
R5 million had also been allocated to the municipality to help with the immediate paying back of creditors. Officials were allocated to key positions to assist. Working with the Treasury, there was a comprehensive financial plan developed for Thabazimbi. The plan informed the Section 154 package, as it identified the remedial actions needed to help the municipality with its financial issues. R25 million allocated to the province also helped towards solving some of the issues faced in Thabazimbi. There were challenges of instability at the council level, but the Department still had the option to invoke Section 139(5), which dealt with financial management planning.
Mr Mileham was concerned whether the department had done an analysis on the effectiveness of the intervention -- when a municipality was put under administration, there were certain predetermined objectives that needed to be present – and he asked whether these predetermined objectives were being met in Thabazimbi. With regard to the capacity of administrators that were appointed, it was important to ensure that people appointed as administrators had the ability to deal with the work given. What was being done to ensure that administrators had the relevant capacity, and were knowledgable? Were there checks and balances in the appointment of administrators?
Mr Khasi replied that the practicality of invoking Section 139 in municipalities was difficult. At times, it was effective, even if this was not in accordance with what the Department would have wanted.
Mr Fosi followed up, and said that proposed in the Bill was the establishment of a database for provinces, with the names of qualified persons where the provinces were able to choose competent candidates for vacant posts. The Department wanted to ensure that the interventions achieved the intended outcomes. The right empowerment measures were needed to put working systems in place to address issues of instability.
Mr Mileham suggested that the Bill should make provision for the NCOP and the Minister to disagree on failed interventions.
The Minister commented that without the political will, there would be a challenge to the effective implementation of the IUDF. In the NCOP, all provinces were represented, and the premiers of the provinces supported the IUDF. The Western Cape, for example, had made further submissions to enrich the project. The future of South Africa was in urbanisation, hence the importance of the IUDF and the general role of the Department. It was important to plan for urbanisation now in order to realise the gains from the development of this trend. It was important to appreciate the work done by the Department, including the interventions implemented. He asked for suggestions on how the intervention could be further enriched and effectively implemented. Attention must be paid to the Bill -- on how it was to be implemented, when and where. It was imperative for Members and officials to communicate facts and to communicate responsibly. The input received from members was valued and appreciated, as it would help the Department in its operations and general organisational success.
The meeting was adjourned.