2021 Division of Revenue Bill: SALGA briefing

Standing Committee on Appropriations

03 March 2021
Chairperson: Mr X Qayiso (ANC) (Acting)
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Meeting Summary

In a virtual meeting, the Committee received a briefing from the South African Local Government Association (SALGA) on the 2021 Division of Revenue Bill. 

The Committee asked questions on capacity building, consequence management, conditional grants and infrastructure grants. SALGA reported that the debt owed to municipalities and by municipalities could not be addressed without addressing the underlying systemic and structural issues. A holistic approach would be required by government. 

SALGA reported that there was a need for a radical review of the proportions of the allocations to the three spheres of government. Whilst they welcomed the extra R20 billion in COVID-19 relief funds, this did not match the revenues that had been collected in the previous year. There was a need for a further relief package for the forthcoming year. 

Members asked what measures SALGA was putting in place to try and ensure that municipalities were governed more effectively; what were they doing to give guidance to municipalities to try and make them independent and sufficient in terms of development; whether the resources that were allocated to local government were being used optimally; and to improve service delivery; and if public representatives should not be more accountable to the municipalities and the office of the Speaker, rather than political parties. Another Member referred to municipalities having to return unused funds to the Treasury, and asked whether the problem was a lack of funds allocated to municipalities, or their inability to spend the little that they had. The idea of pumping money into a system that was unable to utilise the funds meant they were exacerbating the problem of under-performance and under-spending. 


Meeting report

The Committee Secretary said Mr S Buthelezi (ANC), Chairperson of the Committee, was unable to attend and chair the meeting because there had been a bereavement in his family. He called for nominations from the Committee for an Acting Chairperson for the whole week. 

Mr O Mathafa (ANC), who was proposed, said he was having difficulty with the network, and asked that Mr X Qayiso (ANC) be nominated as Acting Chairperson. Mr I Morolong (ANC) seconded the proposal, and Mr Qayiso accepted the nomination to act as Chairperson. 

2021 Division of Revenue Bill: SALGA briefing

The South African Local Government Association (SALGA) presented a briefing on the 2021 Division of Revenue Bill. 

It found that the local government’s allocation from nationally raised revenue was inadequate, as indicated in the review of the local government equitable share and the “End of the Road” studies conducted by the Public Affairs Research Institute (PARI). It acknowledged the national government’s gloomy picture of the economic outlook and fiscal challenges it faced that were exacerbated by the unforeseen and continuing demands on the fiscus as a result of the COVID-19 pandemic. SALGA would work with the national government on resolving the challenges faced by local government, based on the activation of the resolutions taken at the budget forum in December. 

SALGA was concerned with the proposed decrease in equitable share of R6.5 billion (R78 billion versus R84.5 billion), from last year to this year and reducing by 0.4% over the medium term expenditure framework (MTEF), amid the ever increasing number of poor households due to the effects of COVID-19. It commented that the marginal increase of 7.3% in conditional grants would not ease of the pressure on local government (LG) to address the growing infrastructure backlogs caused by migrations to cities.

In terms of the revenue and expenditure management framework, revenue by municipalities had declined during the COVID lockdown and the extra R20 billion in COVID-19 relief did not match revenues collected in the previous year, according to a survey conducted by the Department of Planning, Monitoring & Evaluation (DPME). Municipalities collected 20% of the billed revenue in the period April to June 2020, and the collection rate in the corresponding period in 2019 had been 93%. Municipal expenditure on goods and services, especially water, increased due to extra demands from municipalities to cater for COVID-19 related preventative measures, like sanitising public facilities. 

According to the study commissioned by SALGA, the subsidy was lower than the cost per household for the basic level of the service. It would part take in a new work group to research the actual costs of rendering these services and ensure that there was a differentiated approach when allocating the basic services component of the equitable share (ES) to municipalities

In terms of municipal financial viability and sustainable services, SALGA reported that the debt owed to municipalities and by municipalities could not be addressed without addressing the underlying systemic and structural issues. A holistic approach would be required by the government. They welcomed the establishment of a multi-disciplinary revenue committee (MdRC) which sought to continue to implement the recommendations from an inter-ministerial task team (IMTT), in the absence of such a body. The MdRC was established at the national level, and would be replicated at the provincial level to address municipal financial sustainability. 

When SALGA looked at the infrastructure grants, the marginal increase of 7.3% in conditional grants would not ease the pressure on LG to address the growing infrastructure backlogs caused by migrations to cities. Poorly capacitated administrations perform poorly on capital expenditure (CAPEX), and conditional grants get taken away, so capacity-building measures had to be undertaken to fast track CAPEX spending in municipalities. 

SALGA welcomed the allowance of 5% of the Municipal Infrastructure Grant (MIG) to be dedicated to asset management. There was a planned budget forum lekgotla on asset management and investments between SALGA, the National Treasury and Cooperative Governance and Traditional Affairs (CoGTA), to identify and solve systemic and structural challenges through policy proposals.

In addressing the problem of capacity building, they had decided to provide for the creation of effective capacity to support municipalities to root out and prevent corruption, particularly in this period of the pandemic. A mechanism was needed to support municipalities to build technical, managerial and leadership capacity in the new normal. However, through these provisions, SALGA must be involved in the study of consolidating capacity-building initiatives undertaken by National Treasury. 

SALGA acknowledged that the amounts of transfers to LG had been growing, albeit from a very low base and at an average of 2.3%, which was still below the average inflation rate of 3.3% for the 2020 calendar year. There was a need for a radical review of the proportion of allocations to the three spheres of government, in line with the studies conducted by PARI. With the latest official unemployment rate sitting at over 30.8%, the collection of own revenue by municipalities would be impacted negatively by this development and exacerbate the decline due to the COVID lockdown. 

While they welcomed the extra R20 billion in COVID-19 relief funds, this did not match the revenues collected in the previous year. There was a need for a further relief package for the forthcoming year. The expenditure requirements of LG had also shifted to cater for the COVID-19-related needs of the communities, which were mostly emergencies. With the current Division of Revenue Bill (DORB), it should be expected that improvements in local government performance would be realised with the activation of the 2020 budget forum lekgotla resolutions.


Mr A Sarupen (DA) said that SALGA had a very important responsibility in the sphere of local government. He wanted SALGA to advise what measures they were putting in place to try and ensure that municipalities were governed more effectively, and whether the municipalities would have the capacity to deliver services to the people. 

Secondly, what measures were they putting in place to give guidance to municipalities to try and make them independent and sufficient in terms of development. The Department knew that municipalities were having a problem with revenue collection. Some were rural and had limited revenue that they could collect, so could SALGA develop those rural LGs to urban or semi-urban, where they could become self-sufficient. 

Thirdly, the limited resources that they gave to local government were not enough, and needed to be increased. However, the first thing they had to ask was whether the resources that were allocated to local government were being used optimally. He believed the answer was no. If they took the issue of procurement alone, the amount of money they were losing to procurement processes, starting at the local government level, affirmed his concern. It was estimated that they lost approximately 40% on goods and services, which would among to approximately R300 billion annually. 

Fourthly, in terms of the quality of services by public representatives which reported to political parties, did they believe that they needed to change that in order to make them more accountable to the municipalities and the office of the Speaker? In essence, this was what should happen, because this was the level of communication between them and the people on the ground. 

Lastly, the Minister of Finance was attempting to proceed on a zero budget process, which he believed was part of the problem that they had right now. There was a lack of communication between the municipalities’ public representatives and the people on the ground, and as a result people protested because they were not part of the decisions that took place. He strongly believed that if they engaged with the people in the particular areas in municipalities about what they wanted to do and they complied with these plans, they would not have protests. Protests arose because a lot of matters were imposed on communities, which made them frustrated because of the lack of engagement with the officials and the municipalities. 

Mr O Mathafa (ANC) asked what role SALGA played to ensure that the municipalities function optimally. From past experience, he knew that SALGA had working groups of their own, so his question was how they assessed the efficiency and impact of the working groups in assisting municipalities to monitor their performance. How did they review the work on an annual basis of what they had done together with the recommendations, implementation and impact as far as delivery was concerned? 

Secondly, he agreed that the budget allocated to local government may not be sufficient for them to meet their obligations. However, two weeks ago they had a presentation from National Treasury (NT) which had referred to funds that were withheld from certain municipalities because they did not comply with the regulations. The municipalities that were affected were in the Free State and North West. His question was whether the problem was a lack of funds allocated to municipalities, or the inability to spend the little that they had. The idea of pumping money into a system that was unable to utilise the funds meant they were exacerbating the problem of under-performance and under-spending. What was SALGA doing to assist municipalities to comply with the legislation, regulations and requirements that support conditional grants? It also involved the issue of accountability. Was SALGA satisfied that there was thorough accountability in local government and the procurement area?

Thirdly, the pronouncements by the President on the need to professionalise the public sector at the national level had been raised. It was known that steps were being taken, but the question presently was whether SALGA was picking up a response from the municipalities on being able to professionalise their own space. If they were, what steps were being taken, and what was SALGA’s view on the municipalities being able to achieve this particular task?

Lastly, there was a need for capacity building measures to improve performance and budget. Had SALGA identified what could be the prime causes for the particular under-performance, and were there measures that it would have recommended to municipalities? If so, what had been the response from municipalities about the recommendation from SALGA, the NT and the President?  

Ms N Ntlangwini (EFF) expressed her concern at the poor performance of municipalities. She believed that SALGA was not fully honest with the Department, or giving it a better way forward, with the measures they would implement to ensure that the poor performance at municipalities could be curbed. Municipalities were at the heart of service delivery. If they had municipalities that were not functioning, the poor who did not get water or electricity, for instance, would not get them on time, and this would result in services not being delivered. She wants SALGA to report on their plan to ensure that they had fully functioning municipalities. As they prepared to go into local government elections, did SALGA know how many municipalities were functional and were in a good state? She wanted SALGA to give her a proper report of what was happening in all the municipalities across the country, because they were on the verge of collapse. 

Secondly, the Committee had always advocated for SALGA to get the majority of funding when budgets were cut. However, there were situations where municipalities could not use their funding and had poor financial performance based on corruption, fraud and maladministration. What was SALGA’s plan to ensure that if they had to advocate for more funding, they could guarantee that these funds would not be mismanaged? What consequence management had SALGA had put in place to make sure funds were not misused through corrupt activities?

Thirdly, she wanted to know about money being withheld by NT from some of the municipalities. How did that impact service delivery, and what was SALGA’s plan to ensure that it did not happen to other municipalities, where money would be withheld because of individuals who did not adhere to the standards?

Ms D Peters (ANC) said that while SALGA argued for increased funding, their oversight regarding the lack of capabilities and capacity could not be ignored. The National Treasury had also raised the issue of capacity in municipalities. She asked why municipalities had challenges in terms of lack of capacity and the capability to spend money. The issue of capacity building had been repeatedly raised each year. She asked SALGA for their opinion on why the performance and funds spent by municipalities was so poor. For instance, SALGA acknowledged that the Integrated Public Transport Network (IPTN) was a prime example. The poor lived far from their work and economic activities, and they were the people who spent the most on transport, so one would have thought that SALGA, together with the municipalities, would make the provision of affordable and accessible transport inexpensive. How did SALGA believe that these matters could be remedied? 

SALGA had stated that the debt in municipalities could not be addressed without addressing the underlying systemic and structural issues. What were these issues? They had been given an indication that 35 of their municipalities owed money to their workers. They did not pay over Unemployment Insurance Fund (UIF) or pension contributions, together with other deductions that were inclusive of workers’ salaries. What was SALGA doing to address the issue? The people who were employed as participants in the Expanded Public Works Programme (EPWP) and community work programme (CWP) were operating in the municipal space, so why were municipalities not using these available resources to clean the cities and towns and other infrastructure that was needed in communities? 

Mr Z Mlenzana (ANC) expressed his concern at the fact that they were stagnant in terms of presentations and expectations. As a member of the Committee, he knew what to expect when SALGA had to present. It needed to be improved on, especially the implementation. 

Secondly, SALGA was guarding unfunded money -- could they be briefed and updated on the current state of affairs in municipalities regarding unfunded money? What was SALGA doing regarding that? 

Thirdly, SALGA had spoken of a long-standing “procreation of deficiencies.” What was SALGA’s mechanism to deal with this issue? Did they believe they should declare incapacity to spend as a crime against humanity? The Committee would find that there was still money that was not spent when Treasury reports to them, which meant there was no capacity to spend in municipalities. 

Fourthly, there had been identification of poor performance amongst municipalities due to a lack of professionalism, hence the commitment to professionalise the Department. How far had local government gone with this commitment of trying to improve the professional ethics of municipalities? 

The Chairperson said that they had had an interaction with SALGA last year at which they had raised a number of critical issues. In their submission, where they reflected on their expenditure, they had indicated the inadequacy of the local government sector. They knew the total shares of local government transfers would decline by 2% over the MTEF through fiscal consolidation measures. This involved R15.5 billion from the local government EPWP share allocation, R2.7 billion from the general fuel levy, R2 billion from the conditional grants, and an overall decline of 4% in the real average growth rate of the local government EPWP share. What had been the 2020 December budget forum resolution with regard to the equitable share?

Secondly, the conditional grants were set to increase by 3% in real terms in 2021 off a low base, and the steady decline in basic services, in infrastructure and capacity building transfer in real terms over the MTEF was going to have an impact on the infrastructure across municipalities, especially in the rural areas. How did SALGA see this being resolved? Evidence provided through the research of the Financial and Fiscal Commission (FFC) and SALGA provided evidence that revealed that the subsidy amount from the shares was still significantly lower than the actual cost of providing basic services to poor households. What was the view of the budget forum on this differentiated approach towards basic services when allocating the equitable share to municipalities? 

The issue of debt being owed to municipalities could not be addressed without addressing the underlying systemic and structural issues. What were the changes that they proposed? SALGA had welcomed the structure of the multi-disciplinary new committee which sought to continue to implement the recommendations from the inter-ministerial task team to address deficiencies in the revenue chain. Whenever there was a problem, another structure was established -- why was that? 

What had happened to the capacity-building measures that had been provided in support budgets for municipalities? Capacity-building measures had been adopted, but it seems they had not yielded any results. He wanted to know what support agencies were present to provide capacity building. Throughout their presentation, SALGA had referred to the budget forum with regard to division of revenue, which they had to pass. What did the budget forum say about the matter? Was the responsibility for the division of revenue, when regulating support, supposed to rule out and support corruption when it already existed? 

Lastly, the overall theme from their submissions was that the division of revenue bill would impact on the delivery of basic services to the poor and vulnerable, and that the unresolved structural and systemic challenges, which included revenue, would continue. Were they being realistic when suggesting this?

Mr I Morolong (ANC) asked how SALGA supported its functions to implement recommendations of financial and budget management.


Ms Stella Mondlane, SALGA representative, responded on measures that had been put in place to ensure that municipalities were run correctly. She said they should all agree that the local government space was highly politicised. The question had been put as to whether local government was working on its professionalism. She believed it had been raised because of the understanding that local government was highly politicised, in comparison to provincial and national government, which was making their challenges complex. 

SALGA had over the years ensured that workshops and training were done for municipal public accounts committees (MPACs) and finance committees, to ensure proper oversight was done. What became self-defeating was a referee and a player situation. To give a practical example, in a municipality one would find a Member of the Mayoral Committee (MMC) who was the head of a department (HOD), over which there would be a portfolio committee to which the HOD was supposed to be accountable – and he would be its chairperson. That person became a referee and a player. It made it difficult to conduct proper oversight over such a person. They encouraged chairpersons of committees to have different chairpersons and teams so that they could easily distinguish between the legislator and oversight.

With regard to revenue enhancement strategies, she referred to the Eskom situation. Electricity distribution was a municipal function in terms of the constitution, and its revenue was the biggest revenue contributor per consumer in cases where municipalities were the service provider. However Eskom continued to supply 50%directly to major energy consumers, despite it being a constitutional municipal function. It became a problem when a municipality wanted to use electricity cut-offs as a means of credit control, because they had consumers that were not paying for water, and most were applying for subsidies. The lack of consumer accounts being paid was an indicator of unemployment amongst the communities. These were the realities that they had to deal with as local government.

Regarding the question of moving away from public representatives not being accountable to political parties and instead being more accountable to the office of the Speaker, SALGA was trying to do a study, as part of which they had attended a federation of Canadian municipalities. They were effectively accountable to the offices of the Speaker, and not to political parties. Once they had completed the study, they would draft final recommendations which would be lobbied among the municipalities and wait for their feedback and submissions. 

Provincial governments and the NCOP needed to do more to assist LG with capacity building, because they tended to put municipalities under section 139, which had proven over the years that it left them in worse situations than before invoking the section. They choose section 139 instead of section 154, which advocates that more support needed to be given to local government. They had always had discussions on the matter, but it continued to happen. Many of the municipalities that they find in terrible financial positions were found historically to have been continuously put under section 139, and it continued to yield no positive results.

Ms Khomotso Letsatsi, Chief Officer: Municipal Finance, Fiscal Policy & Local Economic Development, SALGA, responded to the question of the working groups’ efficacy, together with the issue of the multi-disciplinary revenue committee. She clarified that the MdRC was not a SALGA working group, but a work stream that was created out of the recommendations that had been tabled to Parliament in response to the issues of electricity distribution and reticulation which was convened through the IMTT. However, the IMTT was no longer in place, and what they currently had in place was a political task team that was led by the Deputy President. This question was interlinked to the question of local government not paying creditors on time. They had been dealing with the issue of the debt owed to Eskom and to water boards. These committees had been created with a mandate to make a plan to address the issues around debt owed by municipalities, and debt owed to municipalities. Municipalities were sitting with a book of debt of over R191 billion. They reported to technical task team that had been created consequently to the political task team. A number of proposals were in place in terms of the work of the MdRC, which was a work in progress. Water board-related debt had been referred late last year to the MdRC to come up with a holistic plan. They were currently processing those matters. There was also an issue around systemic and structural issues. 

SALGA had seen that in areas where municipalities provided services, such as electricity, among the basket of services they provided, it worked with their credit control. Their collection rate was higher than those municipalities that did not have that credit control. The legislation provided for what basically needed to happen, and municipalities had to report when they undertook external safety control delivery mechanisms. There had been challenges over the application of section 78, because of what Eskom was doing to municipalities in terms of procurement and the other processes. 

There was an issue of accountability, together with the Auditor-General’s (AG’s) findings, and how that had deteriorated over the years. SALGA had tried a different approach. They were consolidating their efforts with National Treasury to make sure they advocated for an invocation of section 216, where they encouraged the Treasury to provide support to the respective department ensure they improved compliance in local governance. There was a hold in dispersing equitable shares to certain municipalities because of the issue of non-compliance, which was an instrument that was used to clean up the sector. SALGA strongly believed in holding the respective municipalities that had been found guilty accountable. 

SALGA had adopted a specific focus, in which it had engaged with international partners to benchmark around issues of building capacity, which had started with the water boards. It was part of a group in inter-governmental relations (IGR) aiming to enhance the capacity at different municipalities to address various issues, with emphasis on non-revenue water losses and electricity. They believed they had been successful with the interventions that had been put into place to address the issue of money that had been lost through a lack of capacity and a backlog of auditing infrastructure. Where there had been an increase in conditional grants, they would work with municipalities to make sure that under-expenditure did not continue. 

When they go through the process during planning the first leg of the budget forum, they usually did not have time to discuss policy-related issues where there were challenges. They needed to put their heads together through the inter-governmental structures to come up with policies. SALGA had had fruitful engagements in the forums, where they had a meeting of minds with the National Treasury, CoGTA and SALGA, as a representative of local government. The first phases they had looked were the revenue work stream, the expenditure work stream, and the powers and functions work stream. There had been resolutions to implement measures that addressed challenges, with solutions which the technical team had tabled through the budget forum. They were operating in a difficult environment, and the fiscus would be under constraints that would make it difficult for it to make allocations to the different spheres of government and assist them to fulfil their constitutional mandate. However, considering the governance issues which surfaced through the AG’s reports and the credibility of the sector, there was no doubt that these issues needed to be addressed. 

Last year, SALGA had introduced a new response mechanism in the Portfolio Committee, where the mayors, municipal managers, finance managers and CFO’s would be called to come and account on the progress they were making, especially around the repeat findings of the AG.  

Regarding the technical support fund not yielding results, there was a need for them to go back and make a proper analysis to establish where they were failing, and how best to deploy the resources they had in order to get the results they desired. It was not about the resources had been set aside for capacity building, but rather why they were not seeing the kind of results that they would like to see. That was a matter they appreciated that they needed to reflect more on. 

To support other sectors deal with their audit outcomes, SALGA had a program called the municipal audit support programme, which focuses on training to improve the oversight role. They had also created a multi-disciplinary team that involved National Treasury and CoGTA around the audit outcome so that they could consolidate their resources to have a bigger impact on accountability and consequence management. SALGA had established a consequence management framework, together with their IG partners. 

Further discussion

Mr Mlenzana wanted to repeat his question because he felt that it had not been answered in the manner in which he had asked it. He was asking about the incapacity or incapability to spend, and why it could not be a crime. 

Ms N Hlonyana (EFF) described the presentation by SALGA as skinny and lacking detail. They had said that there would be less revenue collection in municipalities because of COVID-19, and because of reduced allocation reductions, they expected that municipalities were going to suffer. With all this going to happen, what did SALGA think the solution should be? With the relief package it was proposing, exactly how much would they need to make sure that the municipalities could meet their service delivery targets? Thirdly, on infrastructure grants, they had spoken about putting in place capacity-building measures -- what measures were they were proposing? Lastly, what had happened to the accounting officers of municipalities which had failed to comply with the DORA regulations?

Ms Peters was worried by the response of SALGA on its accountability and oversight model of local government. It was difficult to see how it was possible that somebody who was an MMC responsible for infrastructure or social services could be the chairperson of a committee to which he was supposed to account. She believed this matter must be raised with the Minister of CoGTA through the representatives of SALGA. The matter was a gross irregularity. A person could not account to himself. Agenda items would not be dealt with appropriately, because the support team of the chairperson of the committee was the same support team of the MMC. She now understood why SALGA said their problems were structural and systemic. 

She referred to municipalities that had ghost workers, or were not paying over to third parties, or were not able to render services. What challenges did they have in common? 

SALGA had mentioned that with regard to the Integrated Public Transport Network, they were calling on the Department of Transport to support the local sphere of government. However, when one focused on water or roads, for instance, they were a very serious concern. The President had been exposed to sewage that was running in the streets. There were municipal areas that did not have water or good quality of water, as the water was contaminated with mud and other substances. She believed something must be done before the next local government elections. The issue of capacity and capability had been raised consistently. Was SALGA convinced that the training that was being offered by different institutions in the country was the right and adequate mechanism they could provide for the municipalities?

The Chairperson asked about the issue of getting electricity from independent power sources. He wanted to know what the state of readiness of municipalities was, to adapt to such a shift. He asked if there were there any municipalities that were ready to do that, because it had been finalised and given the go-ahead. 

Mr Mathafa asked what SALGA’S view was on the pilot project that had started in Johannesburg with the implementation of section 79 of the Municipal Structures Act, whereby the role of the MMC was completely removed from the oversight space, and they had a separate chairperson who would do oversight of the department with his/her own support team. The MMC would then come with his team to respond and account to the committee. When he was a councillor in Tshwane, they had adopted the same model. He believed the pilot method would bring in better results. He asked if they had reviewed the success and failures of Johannesburg and Tshwane as they followed section 79 model, and if they have reviewed what their view on the matter was. Was it something they could introduce in other municipalities to avoid the situation of the referee and player?


Ms Mondlane responded to Mr Mlenzana regarding lack of capability or capacity being considered a crime, and said the matter would require legislative reform because of the laws applicable to local government. The legislation was clear on what grounds a person could be charged. 

The same reasons applied to municipalities which failed. They were losing good administrators and they were left with ones that could not discharge their mandate as councillors effectively. There was always a new set of workers that came in, so even if training was done for a group of councillors, once the first administrative group left, a new group needed to start learning afresh. It was different at the provincial and national government level, because the same people served for three to four terms. 

The recommendation on professionalising the sphere was the only solution to the matter. The issue of capacity building involved finalising the discussion on professionalisation. 

Ms Letsatsi referred to the section 79 pilot project. What they had noticed from analysing the audit fund for 2018/19 was that generally, from an oversight point of view, metros had done exceptionally well. By removing the conflict of interest, the AG had found that almost 70% of municipals were functional. There have been interventions in that area. There had been a structure set in place to assist failing municipalities so that they reflected good CAPEX oversight. 

There had been a general collapse of payment to creditors on time. They had introduced a programme through the MdRC to focus on the top 20 municipalities that were struggling and owing, and were working on a turnaround plan to address their financial failings. It had been indicated that some of the challenges in those municipalities were systemic and structural, and these were exacerbated where municipality managers were in acting positions, or there was no CFO. There was a positive correlation between the municipal performance and financial management

They were looking into the ghost employee situation from a systematic point of view. The programme had not been finalised yet, but it was on the radar. They had convened with members sitting in the bargaining council side were responsible for governance and capacity within SALGA. It was an area of concern, together with the building of governance and capacity. 

Regarding municipalities which had failed to comply with the DORA regulations, SALGA looked at the conditional grant framework and the capacity to spend, as some municipalities were worse from a capacity point of view but needed continuous monitoring. They were currently working with municipalities and had held a number of seminars and training sessions to establish the challenges they were confronted with and how they could be empowered within the private sector. 

Readiness and awareness had been raised for the need for local government to participate when the IPPs came on line as electricity providers. Training would start from March, and was a key focus of their annual performance plan. 

Ms Letsatsi said the municipal audit programme was linked to the capacity building. On 8 June 2020, they had a national executive meeting where they changed their posture in extracting accountability from member municipalities in the 2018/19 Municipal Finance Management Act (MFMA) audit outcomes. Part of the measures that had been advocated by SALGA was that where a municipality, for instance, passed unfunded money, Treasury would implement measures to withhold the transfers until a funded budgeted was passed, and ensure that there was consequence management. 

SALGA acknowledged the limitations of the fiscus. That was why they worked together in participating with budget forums and other aspects with Treasury to ensure the country’s financial sustainability. 

There were a few municipalities, including the city of Cape Town, which had indicated their readiness to procure electricity from the self-generating PPIs. There would not be a one size fits all approach for all municipalities, however. 

Referring to the municipal audit support programme, he said SALGA collaborated with the National Treasury and CoGTA at the provincial level to implement capacity-building to ensure that all the AG’s audit findings were addressed, otherwise they provided the necessary capacity. 

After every five-year cycle, there was 60% turnover rate of leadership in the local government sector. They found that with all the training interventions, the institutional memory was depleted. SALGA’s role was to ensure that counsellor induction of portfolio-based training was rolled out to new employees throughout the sector. Since 2015, instead of only providing training, they wanted to ensure that all training was assessment based, so necessary competence was established. It was the evolution of the capacity-building to ensure consequence management.

Adoption of draft Committee minutes 

The Committee adopted the minutes of 16 and 17 February 2021. 

The meeting was adjourned. 


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