Provincial Disaster Grant performance 2017/18 Quarter 4: hearing; with COGTA Minister

Meeting report

Municipal and Provincial Disaster Grants: COGTA report  

Dr Zweli Mkhize, Minister of Cooperative Governance and Traditional Affairs (COGTA), said the meeting was occurring on the last day on which a natural state of drought disaster was declared, and it had been decided not to renew the state of national drought disaster when it lapsed. However, the existing classification of a national disaster remained in force with the implication that the national executive would still be responsible for the drought interventions listed under the items of the Ministerial Task Team on drought and water scarcity.

Referring to s24 of the Constitution, he said that the Disaster Management Act developed a system to deal with disasters. In line with , Parliament had passed the Disaster Grant for the effective management of disasters.

The grants were not implemented as the first line of defence, and came to complement resources of affected sectors in municipalities and provinces. The grants were jointly administered by COGTA and National Treasury (NT), and were meant to be spent within three months following allocation.

The grants were structured in three categories -- the Provincial Grant, the Municipal Disaster Grant and the Municipal Disaster Recovery Grant.

The Minister said that the spending expenditure trends were depicted as low, but he reminded Members that the grants were not meant to be the first line of defence and were activated only once the resources of the relevant sectors had been exhausted. Furthermore, Government had on several occasions allocated money to deal with disasters, drawing from the contingency reserves as well as the reprioritisation of funds by various sector departments and municipalities.

The Chairperson said that the four last pages of the report addressed what needed to be enhanced and what needed to be done in preparation for disasters, as they were unplanned. Sectors and municipalities should all have such plans.

Dr Mmaphaka Tau, Deputy Director-General: National Disaster Management Centre (NDMC), COGTA, said that the grant was allocated through a grant framework.

He said the reasons for non-performance were:

• Municipalities did not have emergency procurement policies in place, hence the delayed implementation of immediate projects;
• They treated emergency funding like a normal funding programme;
• Reporting was a challenge, irrespective of the provincial workshops undertaken, and reminders being sent to receiving stakeholders.

He said that monitoring and reporting were crucia. The NDMC faced various challenges regarding implementation and monitoring, including:

• Incomplete documentation for approval;
• Use of funds for unintended purposes;
• Funds being surrendered without infrastructure being repaired;
• Lack of proper and poor reporting as per the grant frameworks;
• Municipal Infrastructure Grant (MIG) projects being included in the damaged infrastructure, but a full cost claim being lodged, which resulted in double funding;
• Quality standards being compromised, with the same projects being affected when disasters occurred -- no “Building Back Better” concept implementation;
• Inconsistencies with what was on the ground compared to the expenditure on the projects;
• Infrastructure backlogs being included in the list of damaged infrastructure as a result of disasters;
• Projects falling within normal sector programmes, appearing on disaster listed projects, such as drought projects; and
• Insufficient capacity within the disaster management centres within the three spheres of government.

Various remedial measures and improvements to the administration of grants had been developed by the Department to address the identified challenges.

COGTA had concluded that:

• The provincial and disaster grants had been instrumental in responding to the needs of the communities during and after the disasters.
• It was, however, important to ensure that all organs of state mainstreamed disaster risk reduction and climate change adaptation within their development programmes to build resilience to prevention, mitigation and emergency preparedness.
• A key conclusion was the importance of ensuring that grants were used for the intended purpose, and sustainable and resilient projects were implemented.
• There was a need to follow the rand and evaluate the impact that the grants had in our communities.
• All organs of state should budget for disaster management, and that called for organs of state to institutionalise disaster management in their organisations. This was crucial.

The recommendations to the Select Committee were outlined.

The chairperson commented that the point on following the rand and evaluating the impact that the grants had on the community was very important, and was the purpose of their duties as Members.

Municipal and Provincial Disaster Grants: National Treasury report

Ms Ogalalatseng Gaarekwe, Chief Director: National Treasury (NT), said that there were various similarities in their presentation and that of the Department, therefore she had been covered in many respects.

Part of the funding was already in the Education Infrastructure Grant and the Human Settlements Grant, therefore the focus was on schedule 7, which was the release of funds for disaster response.

The spending pattern of the relevant provinces was outlined. It was highlighted that in 2017-18, Northern Cape could not spend their allocated money. The money had been gazetted in March and that had been too late for them to table an adjustment budget to the legislature. Thit means that that money was not in their books and had to be returned back to DCOG.

The challenges they faced were:

• Inadequate capacity to deal with the submissions, as well as the implementation across the different spheres of government.
• Poor disaster risk management and climate change strategies in the provinces.
• Poor quality submissions from provinces resulting in the application process being delayed.
• Slow verification pf submissions, with requests for funding to National Treasury coming late in the financial year. Transfers to provinces were subsequently made in the last week of the financial year.
• Funds transferred late in the financial year had a lower probability of being spent, as was the case with the Northern Cape, which had not been able to pass an adjustment budget.

In conclusion, it was National Treasury’s view that:

• Capacity in the whole value chain of immediate disaster relief must be enhanced to ensure submissions made were thoroughly thought through, in order to ease any delays in approval and transfer of funds.
• The quality of disaster risk management strategies and climate change strategies must improve in order to serve as an aid to the mitigation of disasters and its effects.
• The application process should be streamlined, with uniform standard documents and processes (e.g. standard submission and reporting templates).
• For disasters occurring in the last quarter of the financial year, the NDMC and provincial DMC must fast track applications to ensure that provinces had sufficient time to utilise the funds.
• Coordination and communication must be strengthened to ensure that all legislative processes were in place and all role players were aware of what was expected of them.
• The NDMC and PMDC should improve the monitoring and oversight of allocated funds to provinces and produce reports that reflect the impact of such allocations. Quarterly non-financial reporting in terms of the Division of Revenue Act (DoRA) were not submitted regularly.

The Chairperson said that these presentation documents were to be used by Members as monitoring tools.

Minister Mkhize said that there was nothing substantive about the money that was being transferred back; it was an administrative process. He assured the Committee that the matter would be resolved, as it was a non-issue.

Discussion

Mr T Motlashuping (ANC, North West) said that it was a common feature that COGTA complained about capacity issues, vacancies, etc, and specifically today they had said the poor reporting by municipalities was a challenge. This was worrying, because they were the national Department and they were the ones who were supposed to be seeing to it that these issues were resolved. It was their duty to ensure effective compliance by the municipalities. There was also no explanation as to what was being done about such municipalities and no mention about consequences for municipalities who did not follow the proper procurement processes.

He needed clarity about the processes involved in applying for funding.

With regard to the Northern Cape issue, the late transferring of money was a problem, as the person transferring the money that late in the year knew very well that the province could not do anything with the money at that time. That was financial dumping. There should be a plan for disasters in the Integrated Development Plans (IDPs), and the Department should ensure that the plan was there when assessing the IDPs. It had given no indication on how this issue of financial dumping would be resolved to prevent its occurrence in the future.

The Chairperson said that the NT and DCOG should submit reports to the Committee on the municipalities that were failing to report, because those municipalities could be part of Members’ constituencies; and it was part of their duties as deployees to ensure that municipalities were complying.

Mr O Terblanche (DA, Western Cape) said that it was a common phenomenon that the capacity to execute was a problem, and he wanted to bring that to the attention of DCOG. The issue of late transfers was a real problem, and the Department should really pay attention to that.

He understood the due process that needed to be followed to get assistance from this fund. He wanted to understand whether it was a cost estimate done by an expert, and if so, what the background of the people that were doing this estimate was. He suggested that at some point a costing exercise should be done, to enable them to plan properly.

He wanted to know where the unspent money went -- whether it went back to Treasury for re-allocation or other purposes.

Referring specifically to the water disaster experienced in the Western Cape, and other areas in general, part of the disaster that they found themselves in was also due to the lack of proper integrated project planning in advance. This was a planning problem, and the Minister should speak to his colleagues to encourage proper planning in advance.

Mr L Nzimande (ANC, KwaZulu-Natal) emphasized his concern about the late transfers, because it even affected how the programme of the legislature was arranged, to get the necessary adjustment for one to access the fund. It was important to put an instruction to Treasury on this.

He said Members were interested in hearing how the Disaster Management Centre was positioning itself to play its role effectively. What was the turnaround, and how were they set up as a centre in terms of their own capacity? Municipalities had raised such issues when they met with them as an Appropriation Committee, so it was incumbent for them to raise this issue on their behalf.

He was concerned as to how the monitoring of municipalities was done, and what assistance was being given to the municipalities that needed help. He wanted to know whether there had been any reviews done since inception -- although the Act provided for a different process -- but had there been an evaluation to know whether they were actually well positioned to deal with the issues. The Department had mentioned that steering committees had been set up, but had not stated what these steering committees entailed.

There was a lack of clarity on the placement of disaster centres in municipalities. They were put under different units, and the Act required them to have a structured centre. This was the why some of them failed to comply, because they had not been put in the proper unit in the municipalities. Most municipalities had not made provision for them structurally and in their organograms.

He wanted to know what plans had been developed to deal with the challenges, going forward.

With regard to the Northern Cape issue, NT said that the Northern Cape could not manage with the late transfer, but the Western Cape had been able to manage with its late transfer. He needed clarity on how the Western Cape was able to manage, while the Northern Cape was not.

Mr M Shabangu, (EFF, Free State) wanted to know what measures were in place, particularly from NT, to ensure that the grants were used for their intended purpose. It seemed as if grants were not used for their intended purpose. Quality construction was needed in order to cap the malpractice of using grants for unintended purposes.

He was concerned as to whether the municipalities which received grants were usually compliant, because if they were compliant there would not be complaints from people about various issues.

Regarding the Free State animal disaster, most of the animal feed usually crossed the country illegally, because most the employees in the agricultural sector were from Lesotho.

Municipalities did not have policies in place, hence the delay in the implementation of projects. DCOG could not release money to those who did not have policies in place, Municipalities needed to be prepared for the unexpected.

DCOG had said that the Free State received a grant for agriculture only, whereas many in the province were without water. Nothing had been said about roads and transport, although the roads were in a bad state. He wanted to know whether the Department also monitored municipal insurances which covered buildings and assets belonging to municipalities.

Snowfall was one of the disasters prevalent in the Free State. Cattle belonging to the poor died, and until today those poor people had not been assisted.

Mr M Monakedi (ANC, Free State) said that COGTA was at the centre of coordinating and supporting the work that the municipalities had to do as far as service delivery and development was concerned. They were the department entrusted with the responsibility to make sure that these spheres were supported and were up to scratch in terms of what was expected of them. In terms of their presentation, it seems as if there were many gaps that needed to be filled and a lot of work that it had to do to ensure that they supported the municipalities. As the Department assessed and approved IDPs, they needed to ensure that this element was checked and ensure that the capacity was adequately catered for as well.

The issue of financial dumping had been raised, and he agreed that National Treasury was being irresponsible by transferring money so late in the year, particularly in the case of the Northern Cape

The issues of the lack of emergency procurement policies in municipalities, to ensure that they were able to respond to unforeseen circumstances, was an issue that the Department had to respond to, and they must report back on the issue. The Department had to monitor the money transferred to municipalities and provinces closely, to ensure that it was being use for the intended purposes.

The issue of not reporting, or slow reporting, needed to be addressed so that one could evaluate how a municipality was performing regarding a particular project. In their presentation, DCOG had not provided for the specific projects being run in a municipality and the status of the projects with regard to completion.

In 2017/18 there had been no allocation for the Municipal Disaster Recovery Grant, and he wanted to know the reason for this.

The Chairperson commented that DCOG should give them more detail on the non-complying municipalities, even if it was at a later stage.

Mr Motlashuping raised the issue of outsourcing, and said that they had independent assessors. From the presentation, it had been said that the assessors were appointed to assess for “post-disaster, deconstruction and rehabilitation.” He wanted to know how damage assessment was conducted when the damage had already been corrected (“post-disaster”).

The Chairperson commented that they were to be mindful of the role played by the agriculture sector in respect of disaster relief in relation to the DoRA, as mentioned by the Minister of Finance.

COGTA response

Dr Mkhize said that issue of capacity referred to the lack of capacity in municipalities in three areas, the first one being governance. They had teams that were addressing this as a matter of intervention. Another capacity issue was financial management in terms of the qualifications of the chief financial officer (CFO) etc. The third capacity issue was that of infrastructure, and COGTA had set up teams to take over the whole planning on infrastructure in districts and manage the execution of projects. The difference was that disaster management was not a mainstream thing, so some weaknesses were discovered only when there was a disaster. The disaster had exposed these issues, but they had noted them and would do a follow up.

Regarding fiscal dumping, there were rules before just transferring money to a municipality or a province. As the Department, they wanted to avoid municipalities or provinces not following the normal bureaucratic processes which were part of their normal infrastructure planning. DCOG first had to investigate whether there were any other resources that had been allocated for that particular project before the disaster, and whether there was any other mechanism by which this issue should have been catered for. This scrutiny was why the processes were so stringent and delayed. Disasters could arise at any time, and it could also take a while to assess the damage. That also delayed the processes and when one finally got to approve, a lot of time had been lost. It was a timeframe issue. What needed to be avoided was having the Department coming late to clear the money. The Department needed to be able to predict the figures so as to avoid fiscal dumping.

The issue of snowfalls was a very painful thing, and somebody needed to respond. The ordinary villagers did not know that they could ask for assistance, and the Department needed to be sensitive to those things. It was a good point for the government to determine how to help such people gain access to relief.

He said that COGTA would follow up on the issue of misplacement of disaster centres.

Regarding monitoring, COGTA allocated the funds, but once the work began they expected that the council, province or legislature where this money was being spent to also monitor, as this was their project. On the side of the Department, what was easiest to do was to monitor expenditure patterns and to do spot checks, but they were not able to go everywhere with all the projects that came up. The MECs must also take responsibility to monitor – it was a joint duty.

Proper integrated planning in advance was key, and the Department took note of that, as it was necessary for government to operate properly. It entailed interdepartmental collaboration, and they were working on this.

Dr Tau said that COGTA was doing work to ensure that the issue of NDMC capacity was addressed, particularly the disaster management centre location issue.

Disaster management was a development concern. They subscribed to the need to ensure that national development plan (NDP) aims were met, and therefore they had to make sure that all sectors responsible for certain chapters in the NDMC were supported. They were guided by the principle that disaster management was everybody’s business.

From a coordination perspective, disaster management stood in two streams -- coordination and mainstream. This showed that there needed to be consensus between coordinators and mainstreamers. A lot of time was spent coordinating forums and other technical committees to deal with this matter.

The Minister had dealt with the turnaround issue and had given the reasons for the delays, but he just wanted to emphasise that they always worked towards the Batho Pele principles, and strived to be prompt and efficient.

With regard to policy review, the Act had been recently reviewed in 2016 to ensure that the mainstreaming of climate change was included, as well as the role of traditional leaders and the role of local municipalities. The Act clarified aspects that were previously unclear. The Act also provided for the reporting of municipalities.

There was the development of a climate change Bill with the Department of Environmental Affairs (DEA), and COGTA was a key stakeholder, because implementing climate change adaptation strategies was a disaster reduction tool.

They were considering proposals to ensure that disaster grants were exempted from the financial year close processes, so that implementation could run smoothly.

Ms Modiegi Radikonyana, Chief Director, NDMC, stressed that the NDMC had been very hard on the turnaround assessments, because there had been so many gaps previously, so scrutiny was imperative. They had saved billions of rands through their tedious and thorough scrutinising.

Funds that were not spent went back to Treasury, because disaster was not the first point of line.

The NDMC had developed plans to deal with challenges. The steering committees were there to assist and ensure that all those affected were on board, to make sure that all the necessary documents were submitted on time, that the assessments were done and all sectors were included in the assessments, and also to draw a commitment from sector departments to do the monitoring and reporting together.

With regard to the snowfall issue, they had encouraged the provinces -- the Free State, Gauteng, KZN and the Eastern Cape -- to come up with a contingency plan to deal with the snowfall hazards. As NDMC, they received warnings from the South African Weather Service and communicated these warnings to the relevant provinces so they knew at what level to respond. Agriculture must also come on board to assist the farmers.

When assessing IDPs, they had discovered that the issues of climate and disaster reduction were not dealt with, and they had emphasised that omission when they met with municipalities and sector departments. Sector departments also needed to include this in their plans to ensure that there was congruency with the IDPs.

Regarding there being no allocation in 2017/18 for the Municipal Disaster Recovery Grant, there had been an allocation to a municipality that had been in need of assistance from the grant.

National Treasury response

Ms Gaarenkwe said that the Western Cape had been able to table their adjustment budget because the fires in the Western Cape had occurred at the beginning of the financial year. They had received the money around November, and therefore the process had happened earlier.

The reconstruction and rehabilitation of infrastructure was part of the maintenance grants allocated to the provinces, and they were responsible for dealing with it.

In future they would work hard with COGTA to ensure they did not put pressure on provinces. They would make sure that their processes were not late.

Dr Mkhize commented that due to apartheid planning, there were a number of areas where people resided near dams but did not have access to water. As COGTA, they had started a re-alignment programme through the Municipal Infrastructure Support Agency (MISA), where they had allocated money to connect communities with the bulk water.

The meeting was adjourned.