Departments of Cooperative Governance and Traditional Affairs 2018/19 Annual Performance Plan; with Deputy Minister

Meeting report

Opening remarks

The Chairperson welcomed everyone and asked Deputy Minister Nel to introduce the topic before the Department presented.

Presentation by Department of Cooperative Governance Annual Performance Plan 2018/19

Mr Andries Nel, Deputy Minister, presented the apologies of Minister Zweli Mkhize, Cooperative Governance and Traditional Affairs, who was attending the presidential launch of the Youth Employment Service. And of Deputy Minister Obed Bapela, who was on bereavement leave.  Deputy Minister Nel said the APP was significant in that it was the last for the Medium Term Strategic Framework (MTSF) ending in 2019 and the Department was working to ensure a smooth transition to the next MTSF. He said the actions of the Department were based on the recommendations made by the Committee and the findings of the AG. He said a key issue was the role of COGTA regarding provinces.

The Department had developed a document on COGTA’s role called “System of Corporate Governance, DCoG’s Role Regarding Provinces”. There were four key areas. The first was the question of the capacity assessment of provincial COGTAs. There was a concern that the capacity was uneven, with the KZN and Western Cape provinces being strong while others were not. The capacity assessment had been undertaken and guidelines had been issued. The second area was the functionality of intergovernmental relation systems. Work on assessing that had started in 2015 and some of the recommendations that had emerged, had been implemented. The third area was national interventions in provinces using lessons that had been learnt in the national intervention in Limpopo province. The fourth area was the alignment of provincial APPs with the MTSF. Through the COGTA MinMec, the Department had developed a set of common indicators and Minister Mkhize had given a briefing on how the national and provincial departments would be moving forward in intervening in dysfunctional municipalities.

Another area of work was ward committees. 4 260 out of 4 392 ward committees had been established. The bulk of those not established, 109 out of 132, were in Tshwane metro. Other municipalities faced community challenges, especially in the form of hung municipalities.

Regarding audit outcomes, he said he was happy that the DTA had received a clean audit and that the Municipal Support Infrastructure Agency (MISA) had received an unqualified audit. He said DCoG had showed an improving trend with matters of concern dropping from 50% to 33%. He said the Community Works Programme (CWP) was still a matter of concern, especially around accounting for assets.

He said MISA would speak to Minister Mkhize’s statement on support for municipalities under distress. He said the Department of Traditional Affairs (DTA) would speak to the issue of the proliferation of headmen and women and on the Commission for Rights of Cultural, Religious and Linguistic Communities (CLR). He said that the National Disaster Management Centre (NDMC) would speak to the challenges of droughts. R433m had been budgeted for assistance of which R348m had been allocated for the current year. The NDMC had been active in the recent floods. He said everything he had mentioned had to be seen in the light of the Minister’s statement of the previous week about supporting municipalities in distress.

He said that the Foundation for Human Rights, the Department of Justice and the European Union had released a socio-economic justice baseline report. One item in that report had found that the level of satisfaction with municipal services was roughly equivalent to the Department’s Back to Basics (B2B) analysis, in that one third of municipalities were dysfunctional, one third were functioning well and one third were functioning satisfactorily.  It would be worth the Committee’s time to read the report.

Mr Dan Mashitiso, Director-General: Department of Cooperative Governance (DCOG), spoke to the progress on recommendations of the Committee from the 2017/18 APP. He said DCoG was leading the Inter-Governmental Relations (IGR) process through the Inter-Ministerial Task Team (IMTT) and was assisting municipalities that were unable to pay, to develop repayment packages. The top 60 municipalities had been prioritized for assistance. He said the Department had assisted municipalities to collect government debt through the implementation of a simplified revenue plan in the Northern Cape and that had yielded success as the total debt collected had amounted to R98 million.

The Department was in the process of establishing a Programme Management Unit (PMU) in order to enhance its capacity for effective contract management and to improve operational efficiencies of programs. In addition, relevant clauses were inserted in the revised Service Level Agreements.

The Department was maintaining the CWP asset register. During the 2017/ 18 financial year a service provider had been appointed to conduct a comprehensive asset verification exercise to validate and consolidate asset registers and to determine asset values.

On progress on the audit findings by the Auditor-General (AG), he said that the Department had effected improvements to the Technical Indicator Descriptions (TIDs) which had not adequately explained how the performance would be measured, especially with regards to words like support and monitor, including an elaboration of what the project manager did when he or she offered support and monitored.

The Director-General said that the submission of Portfolio of Evidence (POE) had improved, which significantly impacted on the issues of insufficient evidence or no evidence being provided to substantiate achievement or reasons given for variances on overachievement or non-achievement, and on the evidence being reliable. Challenges that still remained related to the signing of POEs by DDGs, but problems with accessing the vast number of attendance registers for training of CWP participants had been resolved.

The Director-General moved on to discuss the Annual Performance Plans and the Budget Allocations for the Department of Cooperative Governance (DCOG). 

He informed the Committee that, previously, the training on the anti-corruption strategy was only rolled out to District Municipalities. Due to interest and requests by metro municipalities, that initiative would be extended to metros as well. The Department had also contributed to combating corruption through the facilitation of forensic reports to municipalities. The Department would continue to monitor compliance with legislative requirements on the appointment of senior management within municipalities in line with the Municipal Systems Act.  The National Disaster Management Centre would focus on the development of priority guidelines that supported the implementation of disaster management legislation. 

The Project Management Unit and the Municipal Infrastructure Support Agent (MISA) would coordinate infrastructure development at local government level, and also monitor the spending of the Municipal Infrastructure Grant (MIG) in compliance with the Division of Revenue Act (DoRA).

A new Non-Profit Organisation Transfer Model would be used from 1 April 2018. The current budget allocation would not enable the Department to achieve the one million work opportunities target by March 2019. As a result, number of work opportunities maintained, and number of additional work opportunities provided have been collapsed into the single indicator: number of work opportunities provided. There would be no additional work opportunities beyond what was accumulated up to the end of 2017/18.

The total budget for the Department was R 83.7 billion, a 9% increase from the previous year. Transfers and subsidies made up 94% of the budget.

Discussion

Ms B Maluleke (ANC) said she was concerned that the Department’s APPs had the same numbers in all the MTSF years. She said if the numbers were the same for all three years of the MTSF then the Department was going nowhere. Was municipal planning bearing fruit? She said the budget allocation for CWP had increased, and yet the CWP target numbers remained the same. She asked how many municipalities were not operating soundly and wanted to know the names of these municipalities.

Mr K Mileham (DA) agreed with the last point and said the municipalities had to be named so that they could be held accountable. He said that in the previous year, a recommendation had been made that the Department should report quarterly on municipalities, but that had not happened. He wanted the Department to clarify the term ‘war room’ and how war rooms had come into existence. He noted that the CRL was not mentioned in the presentation.

A departmental official explained that the CRL fell under the DTA presentation.

Mr Mileham said the SONA had spoken to the need for urban spatial planning, so he was concerned that there was a significant decrease in the budget of Program 2. He noted the decrease in the municipal demarcation grant but said he then expected to see an increase in the Municipal Systems Improvement Grant (MSIG). He said he was concerned over the NDMC program. Minister Gigaba had said that R 6 billion would be allocated for disaster relief. How was that impacting on the NDMC budget and what was being done to assist on a municipal level? He was concerned that disaster risk reduction was decreasing and that there was insufficient monitoring of the disaster management plans of municipalities. How many disaster management plans had been submitted by municipalities in the previous year?  Were the plans being evaluated and were municipalities prepared for disasters? He asked how far the fire services legislation was, because SA’s fire services legislation was antiquated.

He said MISA should have a bigger role in MIG. Was that being done? He said the biggest problem of municipalities was not technical, but financial. When and how was the Department taking action to intervene in municipalities? He said six municipalities were facing an electrical shut off from Eskom. If municipalities could not meet their obligations, then the Minister should intervene. Regarding the overall review of the state of cooperative governance, he said he was not looking at provinces as a whole and he asked if the next steps were going to be taken. Did those provinces need help to make them functional?

Mr A Masondo (ANC) asked what specific action needed to be taken. He said it was a question of the entrenchment of a culture of good governance and anti-corruption measures, as well as the credibility of governance. Had the Gupta issue, as an example, been dismissed by the Department? He said the outcomes of the Department were weak. Regarding the one million work opportunities to be created by the CWP, he asked what would be left behind after the program had been completed. What were the partnerships mentioned in attaining the one million jobs?  Where were those partnerships happening and what were the specific outcomes of the partnerships? He asked what staff weaknesses had been identified and how would that would be addressed.

On monies owed by municipalities, Mr C Matsepe (DA) asked what steps had been taken to assist municipalities. On the decrease in budget for the provision of electricians and other technicians, he asked how that matter would be addressed.  

Regarding MIG, Mr J Dube (ANC) asked if the Department was aware that some municipalities misused MIG funds. What measures had the Department taken to remedy the situation? Did the Department have figures regarding all municipalities? He said some municipalities did not have ward committees and he wanted a progress report because the functionality of municipalities was dependant on ward committees. He asked if the Department could clarify whether the CWP program had yielded a positive outlook for some provinces. Regarding the war room and consultation with communities, he asked whether there was an improvement in municipalities after consultation. What was the role of CWP in different wards?

Ms Maluleke said that the Department’s targets had to speak to its strategic objectives. She said that in 2018/19, only 18 municipalities would be supported. She asked who would be doing the satisfaction survey. She said that all municipalities, not only 100 municipalities, had to be targeted. 

Mr E Mthethwa (ANC) asked if the Department had gone through the survey report mentioned by the Deputy Minister because he was sure that some of the issues raised there had been captured in the B2B. Regarding Program 3, he asked how the Department ensured that municipalities complied with recommendations and that they adhered to the program? Regarding distressed municipalities, he said that he had still not received the report. Where were these distressed municipalities and what was it that led to municipalities being distressed?

Mr Nel said that the APP was not the sum total of the Department’s work. The Department was forced to present in the APP format. He said the Department had had a meaningful impact on municipalities. As municipalities were a collaborative work, so distressed municipalities had a multiplicity of factors affecting them and hence interventions had to be evidence-led. Some of the factors were political, social, economic, financial, and technical but they needed a collaborative approach. A detailed analysis would not be found in an APP report format, but the work had been done.

Regarding the satisfaction survey report, he said the Human Rights Commission, the EU and the DoJ had released the report only the previous day, so the Department had not factored the report into its presentation or APP.

Regarding CWP, he said the history of the CWP emanated from a job summit and had been handed to COGTA to run. He said there was long term structural unemployment which it was designed to address. The CWP was not designed to have a high turnover of participants. Participants could come and go as their needs demanded. CWP was also more focussed on exploiting its programs through linkages with other government programs, private sector programs and traditional leaders’ programs.

Mr George Seitisho, DDG: CWP, said the APP format did not assist the Department in explaining what it did. He said the CWP budget had made it more challenging. There was an increase in the CWP budget, but that was only to accommodate the annual increase of the stipend paid by the CWP. More challenging and worrying was that the CWP was paying the lowest stipends. He said participants in EPWP worked for 12 to 18 months, but that the CWP had a revolving door with participants leaving and then re-entering. The history of CWP was that since inception there had never been an opening balance on what assets CWP possessed until the previous year. So, this year they knew how many assets they had and how to deal with the maintenance of the assets. There would be new implementing agents on the first of April. He said CWP was lucky that it had not lost any revenue in the belt tightening exercise of the government. It would be a tight squeeze to attain their targets for 2020/21.

On the decrease in the Program 2 budget because of the stopping of the Demarcation Transitional Grant, Mr Themba Fosi, Deputy Director General, Local Government Support and Intervention Management, said the Department continued to engage with Treasury on funding and on the municipal recovery grant which would target distressed municipalities.

On using MISA to evaluate whether the grant was effective, he said the MIG unit was responsible for administration and monitoring expenditure and that should merge with MISA.

On the issue of provincial government, he said one had to look at how the system had been designed. Treasury was responsible for money, even of provinces, and DPSA dealt with administration, even at the provincial level. Sector departments set norms and standards for the provinces, so a different approach was needed for the overall performance of provinces

On the restructuring of the spatial economy, he said the IUDF recognised that there were interdependencies between the different variables. So, municipalities needed to do long term plans to transform the spatial legacies of the past.

On the MIG, he said the Department knew there were municipalities that used MIG funds for operational purposes. These were municipalities with serious cash flow problems. The amount they used was offset in the following equitable share allocation and that led to a vicious cycle. The Department did have a list of those municipalities and they could be provided to the Committee.

The Department was analysing the survey report and identifying the specific recommendations and findings relating to the Department. The Department would submit a detailed report on the distressed municipalities. 

On the payment of government debt to municipalities, Mr Tekoetsile Motlashuping, Acting DDG for Institutional Development, said COGTA and Treasury had been assisting municipalities to deal with simplified revenue plans to assist them in collecting debt from other government departments. There were signs of improvement in collection.

On the functionality of ward committees and the war rooms, he said there had been an adoption of the Integrated Service Delivery model which was intended to look into the community development and service delivery issues at a ward level. The war rooms were not to take over responsibility of ward committees but to deal with the challenges of community development and service delivery. Ward committees needed to be functional so that they could execute their role. The composition of ward committees was being reviewed so that responsibilities could be clearly defined.

On the issue of litigation, he said that it was the late adoption of policies by councils that had led to the delay in the establishment of ward committees. In other instances, it was because of disputes and those had been resolved. 

He said the MSIG grant had changed from a direct to an indirect grant about three years ago. The Department had engaged Treasury to find a model to assist municipalities in the establishment of systems. Not utilising MSIG would create instability in the distressed municipalities. There was agreement with Treasury on how that payment would be rolled out to identified municipalities.

On anti-corruption, he said the former Minister had launched the anti-corruption strategy in Tlokwe and that would be rolled out to districts. The Department was also assisting municipalities to run functional audit committees so that there could be checks and balances on the fiscal activity of municipalities. Municipal Public Accounts Committees (MPACs) were also being vigorously established so they could exercise independent oversight role on financial matters.

On the target of four reports, he said that the content of the report was looking at compliance issues relating to the appointment of senior managers and consequence measures.

On functional ward committees, he said there had been complaints regarding whether ward committees could do what was expected of them. The model was being reviewed and it would be addressed in the outer year. The Department was in the process of finalising the ward committee model.

Regarding the survey report, he said that all municipalities were monitored, but those noted in the APP, in particular, would be monitored to see whether they were functional.

Ms Maluleke said that there was a problem if the targets of the APP were not realistic. She understood that there were budgetary considerations for the CWP, but why were the numbers the same for all years of the MTSF. She said that on slide 22 the targets were not aligned to the APP.

On the R 6 billion disaster funds, Dr Mmaphaka Tau, Deputy Director General: NDMC, said that the Minister of Finance had said that R 6 billion had been provisionally made available for drought and other purposes. The Department needed clarity on when it could be accessed and had engaged with Treasury, which indicated that requests in relation to the drought had to be submitted by 15 June 2018 and in a second window by 13 August 2018. Initially, however, there would be a due diligence process with provinces and municipalities on prioritised resources.

On the monitoring and development of disaster management plans, he said that in the past financial year the NDMC had monitored nine plans. During the past financial year, they had also developed guidelines for disaster management plans.

On the fire service legislation, he said the APP did not reflect all the work the NDMC carried out. Work was happening, and the White Paper was being finalised.

On the reduced budget, he said the NDMC recognised this was because of the economic situation the country faced. They still, however, submitted motivations because the NDMC operated with only 30 officials to oversee all sectors and all municipalities in the country. The fire service unit only had two officials.

The commemoration of the International Day for Disaster Reduction was a culmination and a showcase of developmental measures aimed at reducing risk throughout the year.

Mr Mileham said that of 257 municipalities, nine disaster management plans would be reviewed. Was that correct?

Dr Tau said the nine were what the NDMC had committed to in terms of outcome 10. There were others that were reviewed but not reported on in terms of outcome 10.

Mr Mileham asked what the percentage of municipalities reporting adequately was and what percentage were not reporting adequately.

Dr Tau said he would need to confirm the numbers before giving a reply to the question.

On the names of municipalities where interventions would be made, Mr Ntandazo Vimba, Acting CEO, MISA, said that, as indicated by the Minister, the names of those 55 municipalities would be released when the Minister delivered his budget speech.

There were 226 municipalities in the country that were receiving MIG funds. In the past five years R 3.4 billion in MIG transfers were stopped and reallocated to better performing municipalities. Those municipalities had failed to spend a total of R 8.2 billion. 55 municipalities had had their MIG allocations stopped at least twice, so stopping monies was not helping municipalities improve. Hence MISA would deploy its engineering experts, and the Department its governance and administration experts, in districts. There had been a decline in engineering skills in those municipalities and that was reflected in aging infrastructure.

Regarding the Eskom shutdown in Limpopo, Mr Matshitiso said he had written to the Eskom CEO and asked Eskom to go slow on the process until the Inter-Ministerial Task Team came up with a solution.

On COGTA’s role regarding provinces, he said that the Department would be doing an audit on provincial functionality. The audit would indicate which areas of work the Department needed to execute.

On entrenching good governance, Deputy Minister Nel said that it was central to the Department’s activities and central to the B2B approach. Where there was corruption, it would lead to the destruction of good governance. The Department would oppose it whether it was from an individual or a family.

Mr Mileham asked if it would be possible to have a joint meeting with the Departments of Energy and Public Enterprises and could it be scheduled to look at resolving the municipality - Eskom financial crisis.

Deputy Minister Nel agreed and said that the Minister had said that the IMTT had appointed a panel of experts to reach consensus on underlying constitutional and systemic issues bedevilling a solution to the problem.

The Chairperson said that the meeting would continue the following day to hear the presentations of the DTA and MISA.

The meeting was adjourned.