DCoG on: 2021/22 Annual Performance Plan; Community Works Programme

Meeting report

Opening Remarks

The Chairperson said the Committee would address three items on the agenda from the Department of Cooperative Governance and Traditional Affairs (COGTA), the Community Work Programme (CWP) and the Municipal Infrastructure Support Agency (MISA). The Department’s annual performance plan (APP) addressed many issues that the Committee had been dealing with, including the District Development Model (DDM), the Municipal Infrastructure Grant (MIG) expenditure, the implementation of section 139 of the Constitution, municipal financial viability, the functionality of the Municipal Public Accounts Committees (MPAC) and the disaster hazards.

On section 139, the Chairperson said that the Department had to put a definite deadline for tabling the Monitoring and Intervention Bill by 31 March 2022. The Bill had been in the Department’s APP since the fourth administration, and it was currently the six administration. It was long overdue.

The undertakings and commitments made by the Municipal Infrastructure Support Agency (MISA) must be noted in the APP, which included the support of 44 districts to reduce infrastructure backlogs and to improve the performance of the MIG programmes. The Committee had had a series of engagements with a number of districts and their local municipalities over the past two months, and one of the issues that came up during the engagements was on the support provided by MISA and the limited role it played because of capacity constraints. During the engagements with one of the districts on 9 March, the Committee had identified that there were only four MISA engineers in the district for the entire Free State province. The support provided by MISA in this district was insufficient. The APP for MISA needed to be more realistic on the support that could be provided to the districts, and there needed to be consideration of the capacity constraints. If not, there was a risk of poor achievement because of overly ambitious targets.

The Chairperson reminded the Committee that the last engagement on the CWP was on 27 November 2020. At the end of the deliberations, the Committee had assigned the Department to provide the copies of the five forensic reports on the CWP and the cost of the investigations for each report. A spreadsheet of all the service providers contracted by the CWP since inception and the cost benefit analysis of the CWP since inception had also been requested by the Committee. It had been five months, and the Committee had still not received the documents that had been requested. She said the lack of adherence to the requests of the Committee to information would not be tolerated. The Department needed to account for this delay. Another issue was that officials attended the meetings in numbers, but this had not been beneficial.    

Department of Cooperative Governance (DCOG) APP

Ms Avril Williamson, Director-General (DG), COGTA, outlined the presentations purpose, background, as well as the seven government and DCOG priorities and the five strategic outcomes, as per the District Development Model. On the output indicators, targets and budget allocations, the Department had a total of 35 key performance indicators.

Programme 1 (Administration) had seven targets, and a budget allocation of R293 million for 2021/2022, R290 million for 2022/2023 and R271 million for 2023/2024.

 

Programme 2 (Local Government Support and Interventions Management) had 12 targets, and a budget allocation of R17 billion for 2021/2022, R18 billion for 2022/2023 and R19 billion for 2023/2024.

 

Programme 3 (Institutional Development) had nine targets, and a budget allocation of R78 billion for 2021/2022, R83.1 billion for 2022/2023 and R 83.4 billion for 2023/2024.

 

Programme 4 (National Disaster Management Centre) had four targets, and a budget allocation of R605 million for 2021/2022, R626 million for 2022/2023 and R228 million for 2023/2024.

 

Programme 5 (Community Works Programme) had three targets, and a budget allocation of R4.2 billion for 2021/2022, R4.35 billion for 2022/2023 and R4.36 billion for 2023/2024

The overall medium term expenditure framework (MTEF) budget allocations for the DCOG were R100 billion for 2021/2022, R106 billion for 2022/2023 and R107 billion for 2023/2024.

Municipal Infrastructure Support Agent (MISA) APP

Mr Ntandazo Vimba, Chief Executive Officer (CEO), MISA, said the APP was tabled on 15 March, and the APP was aligned to the pre-highlighted seven priorities of the medium term strategic framework (MTSF). The MISA had a total of 31 outputs and 32 output indicators:

Programme 1 (Administration) had six outputs and six output indicators.

Programme 2 (Technical Support Services) had 19 outputs and 19 output indicators.

Programme 3 (Infrastructure Delivery Management Support) had six outputs and seven output indicators.

On the MISA resource considerations, the 2020/2021 adjusted appropriation for Programme 1 was R91 million, R218 million for Programme 2 and R29 million for Programme 3.

Community Works Programme (CWP)

Ms Williamson presented on the CWP 2020/2021 performance regarding COVID-19, which had an impact on the implementation of the programme. CWP participants had been unable to work during the lockdown levels 5, 4 and 3. Stipends to participants were still being paid, even though work was not done. Because no training took place, fewer than 50% of participants were trained and most agrarian projects were affected. There was under-spending on the CWP budget, and 250 000 participants had enrolled in the programme.

The material audit findings for 2019/2020 included the payment of non-eligible participants, accruals, suspense account balances, the determination of project management fees due to non-profit organisations (NPOs), and accounting for CWP assets. The Department had implemented measures and controls to avoid similar findings. These included improving the current Management Information System (MIS), furthering the development of the Integrated Monitoring System (IMS), having extensive engagements with NPOs to reduce the suspense account balances and to improve accounting practices, and appointing a service provider to conduct the verification of CWP assets. The Department was currently reviewing the structure of the CWP branch to address capacity constraints.

On the suspense accounts and payments to NPOs, she said that the suspense account balance stood at R175 million in March, which was an improvement from the balance in March last year of R238 million.

The current CWP implementation model had weaknesses and challenges. Some the main weaknesses were:

• Ineffective programme management and poor NPO contract management;
• Poor financial and administrative systems at DCOG and NPOs; and
• Failure to manage procurement, tracking and accounting for assets.

Some of the changes in the model included:

• Changing the Implementing Agent (IA) funding model by increasing the number of site managers and linking IA fees to the actual expenditure;
• Improving the control over the procurement of protective gear, tools, materials and training.
• Improving collaboration with national and provincial agriculture departments to manage and design agrarian projects

Ms Williamson outlined the revised objectives and work packages, as well as the focus of the work packages and the revised operating model. Regarding the request that was made by the Committee, as highlighted in the Chairperson’s opening remarks, she confirmed that the Committee had made a request on 6 October for a list of the service providers that were used to conduct the investigations on the CWP, and the cost of the investigations. The presentation on 27 November had been in response to this request. 

Discussion

The Chairperson agreed that the information on the CWP had been requested on 6 October, but on 27 November the Department had said that it was still working on the documents that were requested, and that the proper approval was still needed. The late programme manager had been asked about the cost of the investigations, a spreadsheet of all the service providers contracted by the CWP since inception, and the cost benefit analysis of the CWP since inception, which had still not been received by the Committee.

Community Works Programme (CWP)

Ms D Direko (ANC) said that the CWP presentation was not what the Committee had expected, because serious concerns had been raised and in the last meeting a detailed report on the programme was requested by the Committee, which should have included the names of the Implementing Agencies (IA), their directors, their term of appointment and the commission charged per person, as well as information on whether the appointment of the IAs had been according to the supply chain procedures. All this information had not been received.

The CWP was associated with poor administration and financial management, and this had been impacting the audit outcomes of the Department. She asked what the Department was doing to address this matter dating back to the past four years. The presentation had stated that there was under-spending on the programme -- what were the factors behind the under-spending, because there was a high unemployment rate and a lot of people would not think twice before applying for the programme?

During the first quarter, the Committee had had a meeting with the Department and one of the issues that was raised was the concern on the stipend because it was not even half of the minimum wage. She asked whether the Department had plans to address the matter and whether it could identify any achieved objectives on the programme so far, and if so, what the achievements were. She also wanted details on the pending litigation against the Minister and the accounting officer in the Gauteng High Court. 

Mr K Ceza (EFF) confirmed that the Committee had requested for the detailed reports and even questioned the sustainability of the programme and whether it met the minimum wage requirements. He asked for details on the requirements of the Implementing Agency (IA) to the extent of the people who were implicated, because at the time the IA were getting away with murder, and large amounts of money went to the Implementing Agency instead of the participants. He asked what the action plan of the Department and the CWP was to change the situation and to hold the Implementing Agencies who were defrauding the state accountable. How much money had been defrauded, and how would it be recovered? The Director-General had mentioned a tender to appoint new Implementing Agents. He asked how the new Implementing Agency would be monitored to avoid the actions of the previous implementing agencies, and asked why capacity was not built internally instead of externally from the Implementing Agencies so that money was not redirected from the beneficiaries.

He said that the traditional leaders had concerns on the agrarian reform programme in the provinces. The cost of the programme was R100 million, and other concerns included the compromised quality of the programme. He asked why government projects had compromised quality, apart from the programmes being put out to tender. Oversight committees had to ensure that the projects were done, money was spent well during implementation and that there were outcomes. He asked about the monitoring and evaluation action that was taken by the Department to ensure that its projects were kept in check, and about the salary improvement mechanisms that it had used to ensure an improvement in the remuneration of participants, except through the implementing agencies. He also asked what the Department had done to remove and blacklist implementing agencies which were found to be defrauding the state within the CWP. What was the confirmed total number of CWP participants, how much was the amount that needed to be recovered, and when would it be recovered?

Ms E Spies (DA) said that there were no timeframes for the remedial actions, and asked what the checks and balances were when the funds for the agrarian projects were allocated, how the funds were being utilised during implementation, and what happened to the money that was not used at the end of the projects. She noted that the presentation stated that during the lockdown in 2020 the CWP participants did not work, and said it was understood why most of the workers could not work, but there should have been a rerouting of responsibilities by the Implementing Agencies to assist. The Committee was clearly unhappy with the outcomes from the CWP, because there were so many unanswered questions and gaps. She expressed her disappointment at the work of the CWP.

Ms P Xaba-Ntshaba (ANC) asked the Department whether it had addressed and corrected the issues around the recognition of informal training provided on the job for CWP beneficiaries, the lack of CWP beneficiaries’ exposure to work opportunities related to the formal training that was attended, experiential training not being properly planned and coordinated to provide complete and quality products and services, the variances in the duration of training courses, and the issuing of certificates at the end of the training.    

The Chairperson said that the report on the CWP did not make sense -- it was brief, as if it were an induction document. The Director-General was appearing for the seventh time on the matter of the CWP, and there were excuses throughout the engagements.

Out of the R100 million to support projects of the Department of Traditional Affairs for the agrarian revolution, there was a project that had been highlighted by Inkosikazi Ngonyama, of the Umzivuvu arable land that was meant for crop production, farm inputs and infrastructure in the Amathole district. The project was valued at R25 million, and Inkosikazi Ngonyama had said that the 14 hectares of land project had received poor quality materials and generators, and the fence that was erected had collapsed. Another issue that was raised by Inkosikazi Ngonyama was that the tribal authority in her community was supposed to have received the same funding as the CWP, but the project had been reversed and taken to another tribal authority, led by a deputy minister in government without any explanation, except that it was a decision that came from the higher authorities in government. The Chairperson asked for clarity on the issue experienced by Inkosikazi Ngonyama, because once a community project had been identified, it created an expectation and that there could have been trouble caused for the traditional leader from the community.

The presentation had issues that were concerning, such as the performance on the agrarian projects, because there was no success story, meaning that the R100 million had gone down the drain. The sunflower project would be visited by the Committee in the North West to assess whether it was still functional. The presentation also made mention of other agrarian projects in the country, and the Chairperson asked what these other agrarian projects were, besides the ones that had been mentioned -- what the costs were, who the beneficiaries were, and what the return on investment was.

The Chairperson also asked about the strategic relationship with the Department Agriculture, Rural Development and Land Affairs (DARDLA), and referred to the fourth quarter suspense account of R35 million which was unprocessed, the unprocessed amounts from the NPOs from 2018/2019, and said that some NPOs were getting paid without submitting invoices. These issues were being raised because they had been identified when the financial annual reports were interrogated for 2017/2018, 2018/2019 and 2019/2020. Forensic reports had been requested to evaluate the issues. The presentation had also stated that the quarter four management fees had been withheld -- which NPOs were being referred to, and what was the value of the amounts that were not accounted for by the NPOs? The Chairperson also asked for a detailed report of all the NPOs that had not submitted invoices as per the agreement in the service level agreements, but had still received payment.

Regarding the CWP's audit performance, there was no report on assets, and assets were the major contributing factor, as some could not be accounted for, as highlighted by the Auditor-General AG). The Chairperson asked what the plan was during the current audit, and requested a detailed strategy for the current audit to avoid the issues recurring.

In previous engagements, when the model was requested by the Committee, the Department had said that the model had not been approved, but today the Department had presented on the remodelling of the CWP. She asked if the remodel had been approved by the Minister and Cabinet, why it had been presented, what the approach on the remodel was, and whether it was approved between 27 November and now. She also asked for an elaboration of the strategic and operational principles of the new CWP model.

Referring to the transitional arrangement between the NPOs and the Department, as per the Seriti judgment, she requested details of the implications of the irregular expenditure. What had been done by the Department after the Seriti judgment to date? Recently, it had been involved in litigation, where the court had been approached for an extension of the contracts, the same contracts which were found to be irregular. The details of the extension of the contracts were requested, the implications for the Department and a concrete plan after the contracts had expired.

The Chairperson said that the report should also share the current status of all material irregularities, as identified by the AG in the previous year. She asked about the lifespan of the forensic reports, because there had been five forensic reports in 2019, and what the cost of the forensic reports was. Had the Director-General acted on any of the forensic investigations, and if not, what the plan of action was?

The Mncedisi Ndlovu & Sedumedi Attorneys (MNS) report was where the root of the rot of the CWP had been exposed. She asked when the MNS report had been received by the Department, and if there been action on the recommendations of the report. In the meeting that was held on 6 March, the Committee had asked about the action plans in relation to the forensic investigation reports, which was why the actual reports had been requested. The MNS report implicated a lot of people, including the story of a mayor in Gauteng who had benefited from the assets of the CWP. She asked whether the money had been recovered from the mayor, whether criminal charges laid against the mayor, and why the reports were not being shared with the Committee and why was there no action on the reports. The recommendations of the MNS report were clear on the recovery of money.

The Chairperson asked whether the Director-General was interested in acting on the matters, because the traditional leaders had highlighted that billions were allocated, but there was no progress seen in the communities. The DG had a responsibility according to the Public Finance Management Act (PFMA) and was accountable to Parliament as the accounting officer of the Department, because excuses and attitude could not be tolerated. The Minister should be engaged to deal with the DG's attitude towards the Committee.

Mr B Hadebe (ANC) asked questions on behalf of Ms H Mkhaliphi (EFF). She had asked whether the total number of CWP participants could be confirmed, and how much could be recovered. Could the Department confirm the total amount that was paid to deceased CWP participants and whether the money could be recovered? She requested follow ups on:

• the lack of exposure to work opportunities of the informal training where participants would attend the training, but were not exposed to the relevant work;
• the experimental training which was not properly planned and coordinated to provide a complete quality of products and services;
• the variances in terms of the duration and the training cost, and whether the matter had been addressed; and
• the issuing of the certificates after training had been completed by participants.

From 27 August 2019 till now, the Committee had been promised detailed feedback on the issues. The Department should have had enough time from 2019 to address the issues, so the Committee expected properly furnished documents and reports on the issues.

The Chairperson said that the Director-General seemed to remember only the 6 October meeting, but meanwhile there had been a meeting on 27 August 2019 where the issues had been raised, another meeting on 25 February 2020, when the annual report of the Department was considered, another meeting on 20 March 2020, and on 8 May 2020, when the APP was discussed. The last meeting had been on 27 November 2020. A lot of time had been spent discussing the issues.

Responses

Ms Williamson said investigations had been done on the eligibility of participants’ payments, and a process of validation and quantifying had been done by the Department on the exact losses because of participants who were not eligible and those that were not captured correctly on the system. The financial loss had been quantified at R8.5 million, and the money had been recovered from the NPOs. The quantification of all cash from the participants that were identified had amounted to R11.9 million, the cleared amounts had been R3.4, and the recovered amounts had amounted to R8.4 million, so the Department was able to balance back to the amounts that were identified. The amounts that were identified on the deceased participants were just over R1 million. The cleared amount was R900 million, and the recovered amount was R104 000, so the Department was again balanced in terms of the financial loss. She explained that the cleared amounts referred to the deceased participants who would have worked in a particular month, and who actually qualified for the payment.

On the advances, pre-payments and invoices that would have been submitted prior to payments by the NPOs, the Department had made efforts to reduce the suspense account from R500 million. For the processing of the pre-payments for the 2020/2021 financial year, no payments had been made or issued unless an invoice was received from the advanced payments. The Department had been following an approach where funds were dispersed in tranches. The approach was introduced in the 2020/2021 financial year because there was an anticipation that going forward, the Department would have to include more controls on managing the amounts that were being advanced, and the amounts that would have been made legacy balances that would have required attention. The Department had also followed an approach where reconciling would be done monthly, given the six-month extension that was allowed by the court on the status of the reconciliations.

Another challenge was on the project management fees, which involved the over-statement of fees. At the time, the Department had been unable to indicate exactly what the formula should have been in order to demonstrate the rationale for the project management fees. The matter had been looked into, a formula had been worked out, and the details would be shared as soon as possible with the Auditor-General.

On the forensic investigations, she confirmed that there were five forensic investigations, and the main report had been submitted in May 2020, and the second report was received at the end of August 2020. The investigating institution had received the first report back from the Department, because there was not enough evidence to corroborate their findings in order for the Department to implement remedial action. A team had been put together by the Department to deal with the disciplinary matters, and seven CWP employees had been suspended. The disciplinary process was taking longer than had been anticipated by the Department. The recommendations were being taken seriously, and there had been action.

It was clear that the Seriti judgment had found that the procurement process undertaken by the Department in 2018 was unlawful and invalid, so the order was that the contract must be suspended at the time when it was supposed to end in March 2021. The judgment had also ordered that the contract would be allowed to continue until its end, or the contract would have ceased, because of the nature of the work that was undertaken by the Department around the CWP.

She said many consultations had been held within the Department on the actual model of the CWP, and it was found that for every model that was looked at, there was something that needed to be changed or improved so that the new model would allow for more funds to reach the participants. The Department had run out of time during the process of remodelling, so it had gone out to tender and there had been interdicts involving the new NPOs who believed that the criteria set by the Department were unfair. The first criterion related to the amount for prospective service providers who had managed a project worth R50 million or more, and the second criterion was the extension of the criteria to include not only NPOs, but also any other institution. The interdicts were the reason for the delay, because the Seriti judgment had to be relooked at and an extension had to be requested. The Department had a project plan in place on how to proceed with ensuring that new service providers were included, and how the transitional arrangements would be handled. The initial approval on the model had been done.

On the agrarian projects, she said that there was a list of all 34 projects around the country. These were mainly in KwaZulu-Natal and the Eastern Cape, with some in Limpopo. The Department was aware of all the traditional councils that the projects were linked to, and funding had been allocated to the projects for the current year. Funds that were not utilised during the year were returned to the Department and were put back into the fiscus.

The Department was also aware that the management of the agrarian projects by the NPOs had not yielded the results that were desired, which was why the right expertise had been hired to ensure that the projects yielded satisfactory results. Engagements with the Department of Agriculture had been held, and they had assisted in visiting some of the projects. The projects had been dedicated to a director in the CWP. The implementation of project management expertise had also been considered by the Department to ensure the smooth running of the agrarian projects. Currently the projects were being reviewed by the Department so that there was an understanding of the status of the projects, and how to ensure that there was sustainability and that they were aligned to the initial business plans.

On the payment to participants, she said the initial intention of the programme was not to pay salaries, which was why they were referred to as stipends. The participants were supposed to join the programme and were trained to become independent so that they could create their own opportunities, or join other programmes where they could receive or make an income. This meant that the participants must have been part of the programme for at least 12 months to two years, but it was found that a lot of participants had remained in the programme for much longer than they should have. The Department was looking into the matter, especially where packages were reviewed for partners, and the Department was currently not considering increasing the stipend amount, focussing instead on ensuring that participants were trained and could become independent.

Regarding the documents that had been requested by the Committee, she said that there was clarity on what was expected on the list of the NPOs, their directors, the rationale of the appointments, the approach that was used, the service level agreements, the challenges in the agrarian programme and the CWP, as well as the issue involving the mayor, which was not known about until it had been raised by the Members. A team of lawyers had been appointed to assist the Department in tracking the transfer of funds, and there had also been engagements with the Hawks. Final reports were expected on the progress of the work that had been done.

Mr Pieter Pretorius, Deputy Director-General (DDG): Corporate Services, COGTA, said that the revision of the model had focused on improving the procurement of training and how to improve the availability of the goods and services that were required by the participants, because there had been poor oversight over the two focus areas. Oversight had to be ensured so that better direction was provided to the NPOs on what could bought and maybe in future, transversal contracts could be introduced for the NPOs.

The matter was also related to training, as it was not always clear whether the training involved Sector Education and Training Authority (SETA) approved courses, because there had been a significant increase in the number of courses that issued certificates. However, in the end the certificate was not important -- it was the skills that were transferred to the participants -- so the model had to be improved to ensure that the training courses were beneficial to them.

He explained that the under-spending during COVID was not from the participants’ wages, but because during certain periods of the lockdown it was not possible for participants to work in the field, so the spending on goods, services and personal protective equipment (PPE) had been lower than the anticipated amount in the budget.

He confirmed that the agrarian project would be visited by the Department to validate whether the invoices that were received by the Department corresponded to what was on the ground. The assurance needed to be provided to the Auditor-General and the service provider that had been appointed to conduct asset verification, to ensure that everything on the site was accounted for in the Department.

He said that originally eight NPOs had been appointed, and three NPO’s contracts had been terminated -- two in 2019 and the one in 2020. There was oversight, but the project management capacity in the Department was not enough, and the Department could not insource or capacitate staff to handle the CWPs. The Department could not create a lot of posts for the CWPs, given the compensation funds available, and a co-sourcing model would have to be developed by the Department. For now, there were certain functions that were left to the NPOs that could be controlled by the Department. There was also the possibility of co-sourcing with existing government entities.

Follow-up discussion

The Chairperson said that most of the questions remained unanswered by the Department.

Ms Mkhaliphi said that the Committee was being undermined, because not one question had been answered. It was infuriating that the Committee wanted to conduct oversight, but could not because adequate responses were not being provided by the Department. The Committee had been specific in requesting a spreadsheet of all the service providers contracted to the CWP since its inception. The names of the owners of the NPOs had also been requested, because corruption started from the NPOs. The programme could not be described as a poverty alleviation programme when people in the communities were not getting paid from the programme -- and the programme was a mess. The Department had to account where the R250 000 would come from.

The Committee had had engagements with the Minister, who had said she had visited one of the programmes at a local municipality and was told of all the good work that was being done, but when the actual products were requested to be seen, nothing could be presented. The Committee needed to know who the actual beneficiaries of the programme were, because it looked as though the beneficiaries were the officials from the Department. The Department must prove the Committee wrong, because clear details of the programme must be provided. Specific dates must be given to the Department to present the responses to the questions and concerns raised.

She asked whether the Department had addressed and corrected the issues that had been raised on 20 March 2020 as promised, such as the recognition of informal training provided on the job for CWP beneficiaries, although reasons for the delays had been provided by the Director General. If not, when would the recognition take place? There were no people monitoring beneficiaries’ exposure to work that was related to informal training in the programmes, even though the Department argued otherwise. There were no monitoring systems in place while a lot of money was being spent on the programmes. She asked what the role of the NPOs was, and who the people running these NPOs were.

The Director-General responded that a list of NPOs and the respective directors could be provided, and also on all the training that had been conducted on the past financial years and the number of participants who took part. A table of all the projects could also be provided on the CWP projects under the agrarian programme, and which communities belonged to the traditional leaders, as well as what the status of the projects was.

On the role of the NPOs, she said that a copy of the service level agreement (SLA) could be provided that detailed the roles of the NPOs and the expected deliverables. A table would indicate how the money was dispensed and allocated for participants, as well as management fees etc.

Ms Direko said that the Auditor-General’s previous report had raised issues on the CWP which included the supply chain procedures that were not followed by some of the service providers and Implementing Agencies (IA). Another issue was on the government officials who were still receiving a stipend from the CWP. She asked about the action that had been taken by the Department on the recommendations by the Auditor-General on the CWP programme.

The Director-General acknowledged that the supply chain management procedures were not followed, as confirmed by the Seriti judgment. The arrangement that existed in the Department had not been lawful. The Department had taken the recommendations that were made by the Auditor-General into account, and money had been recovered and all outstanding balances had been cleared. 

Mr Ceza commented that the Director-General had mentioned that the CWP project was not intended to be an employment mechanism, but a training programme. He asked whether the programme was supposed to be static, and whether it did not focus on the material conditions of black participants who had extended families and were the hope of their families. Statistics SA had recorded the unemployment rate at 32.5%, meaning that 7.2 million people were unemployed -- the highest figure since 2008. He asked where the participants would get employment, given the unemployment rate and a lack of manufacturing in the economy, and how opportunities would be created by the Department.

He noted that there was an increase of 70% in irregular expenditure, which was mainly the result of repeat transgressions in the CWP, as highlighted by the Auditor-General, and said it was time to relook at the administrative model of the CWP. He asked for clarity on the findings of the Auditor-General, as the increase in irregular expenditure was clearly a concern to the Committee, and there was a need for a comprehensive breakdown of the expenditure for each entity to determine where the challenges were. He also asked about the issues that had been addressed.

Ms Williamson said the intention of the CWP programme was that it would ultimately lead to job opportunities by providing skills for individuals so that they were independent and could create self-employment for sustainable businesses.

She said that there had been a huge decrease in the irregular expenditure of the Department in 2020. She confirmed that the Department did have a large irregular expenditure of R1.3 billion, but since then a proper loss committee had been implemented to look into the root causes of the irregular expenditure, and how to recover the funds that would have been due to the Department. The whole process had been undertaken by the chief financial officer (CFO) and the loss committee, and letters had been written to those who owed the Department money.

Ms Direko raised concerns following the response by the Director-General that skills were being provided. Her question was focused on what the objectives of the project were and whether they had been achieved. She asked which skills the DG was referring to, because CWP participants were always assisting in cleaning town streets, and nothing more than that. The DG must assure the Committee that after the CWP programme there were visible skills than could be shown by the participants.

The DG gave an example of the Early Childhood Development (ECD) skills training programme, where participants were taken through the programme and in the end could open their own crèches as businesses. The Department was happy to provide training to participants where it was required.

Mr Ceza asked whether the programme perpetuated the apartheid pattern of rendering people as servants to those who controlled the means of production, by re-orientating them to being gardeners and general workers. Nothing was considered in terms of manufacturing, innovation and participation in textile industries, where participants could participate in the economy and industrial development which would bridge the wage gap between the rich and the poor.   

The DG said that the intention of the programme was not for participants to become general workers, but to link the CWP to the local economic development programmes. This was why the presentation had highlighted that through the DDM and by understanding the catalytic programmes, the Department would be in a better position to understand the training programmes that were required so that participants were linked to the mainstream economy. This was why the work packages had been reviewed, but in the past, participants had not been participating in the programmes that were being referred to.

Ms Xaba-Ntshaba said that it was good for an individual to talk about things that they knew about, because the DG was talking about matters she did not understand. She agreed with Ms Direko that a lot of the CWP participants were cleaning streets, and asked where the participants would get the skills for the ECD programme when they were not being trained, and whether the training was done on the side of the road.

The DG said that the challenges that had been raised had been recognised with the participants being given menial tasks.

The Chairperson said that none of the issues that had been raised had been adequately responded to, and the way the DG responded to the questions was as if she did not understand the matters that were being raised, especially since the Committee had interacted on the matters of the programme. The programme had a budget of R3.5 billion, but the issues were not taken seriously, even though the programme affected people. She read a comment from a member of the public on the behaviour of the Department, and asked who the implementing agencies were. A lot of CWP participants were either cleaning graves and streets, and women and youths were being taught how to landscape. All the issues that were raised by the Committee had been outlined in the AG's report.

The Chairperson instructed the DG to compile a report on all the observations of the Committee, because some of the questions had been dodged. Nkosikazi Ngonyama had raised an issue in the previous meeting of a R25 million project in her community where the infrastructure had collapsed within four months.

Mr Ceza agreed that the questions on the CWP had not adequately responded to, and he rejected the presentation from the Department. The DG had first said that the project was not meant to provide permanent employment, but to provide training. He reiterated his question on where the participants would find employment, because people could not eat hope. The notion of ‘half a loaf was better than nothing’ had to stop, and the focus should be on what the economy could provide. Pacifying programmes should be stopped.

He asked how many of the participants that had been trained had linked to the ECD programme and were employed as a result of the training. How much had they been paid, and did the Department do follow-ups on these participants? It was clear that implementing agencies did not care about changing the lives of people, because people would never be well until there was economic freedom. No matter how many programmes there were, they would never change the lives the people because the economy did not build industries in the townships. Economies had been destroyed in the rural areas since 1994, and this had forced people to move to the urban areas for opportunities.

Ms Direko said that the programme was costing the Department a lot of money and it was concerning that the Director-General, who was supposed to play an oversight role, did not understand the programme. The response that was given on the issue of under-spending was that it was because of PPE and training. She asked for clarity on what the training on the ECD programme was, because the DG had said it was the Department’s intervention. What kind of training was being offered by the CWP programme, who provided the training and what was it for? She said that NPOs were organisations that were not supposed to make a profit, but in the programme the Department was contracting NPOs as implementing agencies that were given a commission. She asked how the commission was conceptualised in terms of the scope of an NPO.

Ms Mkhaliphi requested that the matter be postponed to the following week, because the Committee could not wait for the Department to provide responses. The programme cost a lot of money, but there had been no intervention in the unemployment crisis. The Department had hoped that the Committee would let go of the matters, but this would not happen because answers had been demanded since August 2019, when the late DDG had left during lunch to attend to a family matter before responding to the concerns raised by the Committee. There had been no personal relationship between her and the Committee, and there been an expectation that the new DG would provide hope by addressing the matters that were not addressed by the late DDG, who had shown no interest in the matters raised by the Committee. The Committee was not attacking the DG by requesting detailed reports and documents on the programme. The public comments that had been read by the Chairperson showed that the public was interested in the work of the Committee, as its representatives.

She asked who the NPOs were and the specific details of the NPOs in the form of a spreadsheet. She agreed with Ms Direko that NPOs were non-profit bodies, but the CWP NPOs received a huge profit at the expense of the poor who should be benefiting from the programme. The DG responded to the requests for documents simply by saying that the documents would be provided without explaining the issues, especially since the documents were requested in 2019. She asked for the Department to provide the total number of CWP participants and the kind of training that was provided to them, and whether the CWP programme achieved what was written on paper. She also asked who the beneficiaries in the NPOs were, for clarity on the programme, the total number of participants, and the money that still needed to be recovered. She said it had been mentioned previously by the Department that if a participant passed on during the programme, it took time to remove the person on the database system, so the person remained on the system. She asked whether the deceased continued getting paid, and said someone must be held accountable.

Ms Xaba-Ntshaba agreed with Ms Mkhaliphi that a day should be set aside to thoroughly discuss the matters and conclude them. She asked who was behind receiving large payments from the CWP, because adequate responses had not been provided to the Committee. The Department must account for the issues that had been raised. In the previous meeting, a queen had raised an issue on the CWP that had suddenly been removed from her community and given to a neighbouring king’s community. She questioned whether the CWP had been shifted because she was a queen, and said that the undermining of women and patriarchy must stop because it was not good, especially when there were so many women within the Department, including the Minister and the Director-General. Women in leadership positions should not be made to feel unworthy. The Committee was fighting the corruption within the Department.

Mr Hadebe said that the secondary objectives of the programme were to skill and train participants for the purpose of optimising their work outputs, life skills and enhancing their employability and self- employment prospects, to contribute to the development and maintenance of public assets and the provision of services in poor communities, to strengthen public and community participation in the decision making process around development, and to enhance the economic agency of participants which promoted social and economic inclusion. He said one could not manage what they could not measure, and it seemed like the programme was not yielding positive results, as per the objectives.

COGTA’s roles and responsibilities in relation to the highlighted objectives were management, accountability, contract management, compliance, operation systems, budgeting, monitoring, reporting and evaluation. He asked whether the programme was achieving its objectives in the area of ensuring the enhancement of economic participation and social inclusion, and asked how far the Department had gone in ensuring this inclusion, how many of the participants were now economically empowered and how the success was measured.

Regarding skills optimisation and training, could the Department quantify from a particular year the training that had been conducted, and the number of participants that were employable and those that had been permanently employed in various sectors. Success was measured through objectives, because the Department had mentioned that it wanted to enhance the employability of the participants and self-employment. He asked how many of the participants had been successfully able to start and open their businesses, because this was the only way to know whether the money that was pumped into the programme was yielding results without the oversight structures requesting information on whether objectives were being achieved.

The other objective of the programme was to train and skill participants, and he asked whether participants had been skilled and trained and in what field they had been trained. Had they contributed to the vision of service delivery in poor communities, because there were challenges of service delivery, although there was a programme that was geared towards enhancing the provision of service delivery in poor communities? If there were still complaints on service delivery, then the programme was failing. In the next meeting, a statistical analysis was expected on what had been produced in relation to the objectives. Miracles were not expected from the Department, but clear and concise progress reports were. 

Mr Mpumza said that the institutional design of the programme was running parallel to the other programmes that were integrated into the integrated development plans (IDPs) of municipalities. The cooperatives were within a municipal space, and COGTA had the responsibility of gearing up cooperative governance. In order to achieve the desired outcome and impact of the programme as per the objectives, the Department needed to look at this institutional design and ensure that it was implemented as per the IDP of the municipalities, and evaluate and monitor it. It would be difficult to manage the cooperatives without proper monitoring. The DG needed to ensure the alignment with the institutional design and to ensure the rolling out of the DDM.

The Chairperson thanked the Committee for all the comments that had been made. The objectives of the programme were read for the Director-General, so maybe the responses would be better articulated, given the objectives. The programme was indeed supposed to be linked to all the basic services provided by the municipalities, and allegations raised in the five forensic reports indicated that some people who worked in the CWP programme were now part of the lead agents operating across the country. These people were the main beneficiaries and had abruptly left the Department to run the CWP programme.

The DG had to provide the documents on the matters raised on 27 November 2020 by Monday 26 April. The documents must include the five forensic reports on the CWP, the cost of each report, the spreadsheet and profile of service providers since inception, and the cost benefit analysis of the programme since inception. A date would be set aside to discuss the matters, as suggested by the Committee.

The Chairperson said that it was disappointing that the Director-General did not know how many agrarian projects there were in the country, where they were located, the cost of each and who the beneficiaries were, as well as the return of investment on the programme. A report on these questions should be compiled by the DG. She also asked about the strategic relationship between the Department and the Department of Agriculture, Rural Development and Land Reform.

On the under-spending in the suspense account, it was on record that there was over R35 million in the fourth quarter that was unprocessed from the NPOs, and financial reports for the past three years showed that there were NPOs that had not been submitting invoices in accordance with the SLAs. The fact that the issue had not been addressed was concerning. A full report of all the NPOs which had, and had not, been submitting invoices must be presented from the year 2017/2018 till 2020/2021. The Committee wanted to make its own analysis of the information.

On the fourth quarter management fees, the Chairperson asked for clarity on which NPOs were being referred to in the presentation, and the value of the amounts that were not accounted for. She also asked about the consequence management that had been implemented in relation to NPO matters. A report on the assets must be forwarded to the Committee. What was the plan to address the matters raised by the AG? A detailed strategic plan for the current audit had to be submitted.

The Director-General had avoided questions on the remodelling of the CWP which had been requested in 2019, and the Committee was told that this had not been approved yet. Had the model been approved by the Cabinet and the Minister, or was it an idea of the Department? What were the strategic and operational principles of the new model that had been presented? Another important question was the transitional arrangements between the NPOs and the Department as per the Seriti judgment, and the implications on the irregular expenditure. What had been done by the Department after the Seriti judgment was given, and what were the implications of the judgment? Among the contracts that had ended, there were some that had been active for years. There had been illegal appointments and extensions, and the Chairperson wanted to know whether the delay in the remodelling was because the contracted people wanted to continue doing what they were doing illegally. The Department had also approached the court to request an extension of the contracts, even after the AG had raised concerns on the matter, as well as the Seriti judgment. She asked for a detailed explanation of why the NPO contracts were extended, the implication for the Department, and a concrete plan for when the contracts expired.

The Chairperson asked for a report on the status of all the material irregularities identified by the Auditor-General in the previous financial years. On the forensic investigations, the Department had to include the action plan resulting from all of them, and the costs to the Department of the MNS report. Had the recommendations by the AG been carried out, and if not, why? If yes, could a portfolio of evidence of the implementation be provided? The Chairperson asked why the Department was reluctant to act on the report, and whether there had been any action plans after the forensic reports were received, in particular the MNS report, which had been specific on what needed to be done. The Committee had also requested the details of the people who were implicated in the MNS report. It was unacceptable for the same issues to be discussed.

Discussion

Municipal Infrastructure Support Agent (MISA)

Mr Ceza asked what action had been taken to improve the water infrastructure and its capacity to cater for all communities, especially in the Amathole district, because the area was drought stricken, as well as in other drought stricken areas. What actions were being taken to deal with the lack of water in rural areas where there were dry taps, and water had to be collected from unclean sources. How would MISA remedy the situation?

Ms Mkhaliphi said that the CEO of MISA kept on mentioning that the core business of MISA was providing a technical support service, and said there were known challenges when it came to providing these technical support services. Whenever oversight was conducted by the Committee, MISA representatives would be present to tell the Committee that some of them were trainees and lacked experience. She appreciated the presentation by MISA, and said that COVID had exposed the aging infrastructure in all municipalities. She asked how MISA aligned its interventions with its core business, working with selected municipalities in terms of infrastructure, delivery maintenance and stakeholder coordination. How many staff members operated with MISA, and how did it plan to achieve its goals in order to resolve the crisis in municipalities? When the issues started affecting the poorest of the poor, it needed to be questioned why water tanks were still being provided, instead of proper water access and development. How did MISA assist with the issue of aging infrastructure, and how did it plan to ensure proper coordination so that the goals were achieved?

Mr Mpumza commended MISA on achieving an unqualified audit opinion, and hoped that other agencies would follow in its footsteps. In programme 2, it had indicated that infrastructure assessments were being conducted for selected municipalities, and he asked what criteria were used by MISA to select them. A number of municipalities had challenges with the aging infrastructure, which was a result of the lack of maintenance that municipalities did not budget for. Programme 2 also indicated that 30 selected districts had been supported with the implementation of operation and maintenance-related activities. He asked which of the 30 districts out of the 44 received support, and said that some of these district municipalities had been unable to spend their infrastructure grants.

MISA had a representative in the district where R390 million had been returned to Treasury because of underspending. He asked about the role of MISA in that municipality (Alfred Nzo Municipality), where only 40% of the budget had been spent. What was causing the municipality to be unable to provide services where they were needed, instead of returning money to the Treasury? Programme 2 also indicated that MISA was working hard to assist municipalities in aligning bulk water infrastructure. He asked whether the Winnie Madikizela-Mandela Local Municipality was part of the municipalities that were part of the Ludeke Dam project which was constructed a while ago, where there was no reticulation because the budget had not been received and as a result, the dam walls were beginning to crack and there was a potential threat of disaster. He asked whether Ludeke Dam and the WMM municipality were part of the five prioritised municipalities for alignment.

He asked if the training programmes for the 500 officials that MISA planned to train every year would result in accredited qualifications.

Mr Hadebe welcomed the clean audit and asked MISA whether a clean audit translated to good service delivery in relation to their objectives and performance.

The Chairperson said that the funding model of MISA had to be observed, and given the outlined interventions, the DG should provide a comment on this matter. MISA seemed to be operating as a fire extinguisher, fixing issues that did not concern it. Given the status of environmental health in the country, the APP of MISA indicated that there were plans to help district municipalities on waste management, but waste management in the districts was the local municipalities' duty.

On the mission of serving municipalities, where support would be provided for accessing alternative funding sources for infrastructure development, she asked for details of this plan, because the funding model of MISA was a challenge on its own. Was it the minimum amount that MISA was hoping to assist the municipalities with, and where were the municipalities' funds being secured from? Would the 500 municipal officials that would be trained every year in municipal infrastructure management receive accredited qualifications? Would there be a training agency, or would the training be out-sourced? Was there a budget for this training? Plans could not be unrealistic.

Responses

Mr Vimba responded on the action that had been taken to ensure improved water infrastructure and delivery, and said that MISA had worked with the Water Research Commission to understand the status of underground water, especially in the rural districts where many people still did not have access to clean drinking water. The study had shown that there was a lot of underground water in the rural districts, especially in the O.R Tambo District Municipality, and MISA had developed a business case to exploit this, with the focus on small projects. The business case had been presented to the Minister and the Department, and had been supported and approved. This had resulted in a reprioritisation to focus on underground water projects, such as boreholes and the protection of springs. The project targeted a lot of areas, and it was quicker to deliver the service. MISA had also set aside funding to drill boreholes in many communities during COVID, where R4.7 million had been spent from the budget to fast-track the project. The Development Bank of Southern Africa (DBSA) had also set aside money to support the project, and more boreholes were drilled. MISA had also engaged with the Tirisano Construction Fund to fund a number of other water projects, but the intervention was not as successful as anticipated. There were over 20 water projects that were currently running in almost all of the provinces, because the focus was on the contribution of water. R24 million had been set aside to assist with water projects. Some projects had been handed over to several communities across the country.

On the ageing infrastructure, he said the focus had always been on new infrastructure instead of repairing and maintaining old infrastructure because there was a belief that municipalities needed to raise revenue and maintain the infrastructure. The reality was that municipalities had not been able to raise revenue, especially during the COVID lockdowns, which was why there had been a mobilisation to review and balance the new and existing infrastructure. Now 10% had been set aside to deal with repairs and maintenance, and 5% had been set aside to deal with the asset management plans of municipalities. The priority of MISA was waste water and water treatment plants, where there was a challenge of compliance and court challenges because of sewer spillages and pollution.

Regarding engineers that lacked experience, he said that all MISA engineers were professionally registered and educated, and had more experience. The only challenge was that there were not enough of them, which was why graduates had also been paired with the engineers. The graduates were not MISA representatives, but were being trained and exposed so that they could register as professionals. There were 50-plus professional registered engineers, 15 professional registered electrical engineers, 15 learners, and other engineers who were specialists.

On whether a clean audit reflected service delivery, he said that MISA believed that good governance and service delivery worked hand-in-hand, and that if there were sound internal controls it made it easy to monitor programmes to ensure the delivery of services were in line with the plans and there were records that prove that the work had been done. MISA had demonstrated the delivery of infrastructure projects and the ability to account for the expenditure that would result in a good audit outcome.

The Chairperson asked if the engineers were on the MISA payroll, or if they were contracted.

Mr Vimba confirmed that they were on MISA’s payroll, because all technical capacity was insourced. Outsourcing was done only during the implementation of interventions with water projects that required disciplinary teams. There was internal capacity within MISA and there was a process to procure engineering software to capacitate design and machinery for the water projects to avoid outsourcing, which was expensive.

Mr Sam Ngobeni, Acting Deputy Director-General: Technical Support Services, MISA, said the training programme for municipal officials did not result in an accredited qualification because technical refresher courses were offered to officials. The courses were accredited, but did not produce a qualification, and were accredited by the relevant statutory bodies for ensuring that there was continuous professional development for the officials. The training was not in-house, but was facilitated by MISA, where professionals were hired. Previously MISA used the South African Council of Educators (SACE) professional development portfolio and other institutions.

Mr Luntu Ndalasi, Chief Director: Infrastructure Delivery, Maintenance and Stakeholder Coordination, MISA Eastern Cape, referred to the challenges involving the Alfred Nzo Municipality, and said these were mainly on the contract management, where the municipality had procured the services of contractors in an incorrect way, which caused delays in project delivery. MISA had tried to intervene with a multi-disciplinary team that was responsible for Alfred Nzo, which was intended to supervise the procurement process in the municipality.

Regarding the Ludeke Dam, the regional scheme had been initiated a while back and was part of the five prioritised municipalities for bulk infrastructure, as well as Alfred Nzo. The criteria for the prioritised municipalities involved an assessment of the operations and maintenance, and included input by National Treasury. where a database of municipalities that were spending less than 1% on operations and maintenance was kept. The low capacity municipalities were selected from that database, and were prioritised for the current financial year. The MTEF would ensure that there was a balance of the districts, so that the other 14 would be attended to in the next financial year.

Ms Mapatane Kgomo, Deputy Director-General: Infrastructure Delivery Management Support, MISA, said that MISA was engaging on alternative funding sources for municipalities with different stakeholders. These were mainly development finance institutions (DFIs), multilateral banks, commercial banks and private funding institutions that had shown an interest in investing in municipal infrastructure.

The Chairperson asked if the alternative funding was in the form of a loan or a grant.

Ms Kgomo said that the funding came in different forms. DFIs offered blended finance mechanisms to municipalities which could be a loan or grant, while private funding institutions were offering grants where the funding did not have to be paid back, but commitments had to be made to maintain infrastructure so that private investors had comfort that sustainable services would be provided to the communities. The type of the funding depended on the type of municipality and the health of the balance sheet.

Discussion

Department of Cooperative Governance (DCOG)

The Chairperson said that sub-programme 7 on Municipal Governance under Programme 3, Institutional Development, showed a budget allocation increase of more than 5 000% -- from R3.6 million in 2021, to R356.6 million in 2021/2022, and asked the Department to explain the increase. There had been a dedicated session to discuss the National Disaster Management Centre's (NDMC’s) response to the disaster that had occurred recently, including the floods and veld fires which had happened, and she asked the NDMC to provide some preliminary comments on the impact of the disasters.

Ms Direko said that the priorities of the Department, according to the presentation, were infrastructure, service delivery and job creation. There had been some progress with the priorities, but when the Auditor-General’s report was studied, it showed that there was serious mismanagement of funds in the municipalities which negatively affected the priorities of the Department. Some of the municipalities were failing to maintain the existing infrastructure, some had failing and aging infrastructure which required serious intervention, and local economic development (LED) was worse in some municipalities because there were no qualified officials, there were no LED strategies in place, and no budget.

In terms of the DDM, she asked how the Department planned to address the challenges which seemed to be quite prevalent in the municipalities. The report suggested an improvement in financial viability, so she asked for a detailed plan on how financial viability would be improved, as the current state of finances was bad because of COVID. There was also a plan to improve the efficiency of water provision, and she wanted to know how this would be achieved, given that the current state of the water board was bad because of municipalities that were unable to pay their debts. She asked if there was enough money to replace the aging infrastructure that was contributing to the water challenges. Not so long ago, a member of the Committee had struggled with water in their constituency, and it had taken MISA a year to resolve the matter. There was also a challenge where the municipalities were not utilising the MIG funding accordingly. She asked what the Department was doing in such cases, and about the progress and status of the implementation of the smart city framework that had been developed, and if there were positive outcomes so far. What was the Department’s plan to address the issue of unqualified personnel who were occupying senior positions in the municipalities?

Ms Mkhaliphi asked for clarity on the reduction of the local government equitable share of R10 billion. What were the implications of the reduction, and which municipalities were affected the most? The issue of water was a crisis -- what was the role of the Department was in ensuring that water was provided? She said it was frustrating that when water meters were dysfunctional, there were claims that they had been fixed when they had not. How were the lying plumbers dealt with? She asked how the Department could coordinate programmes so that municipalities could be caught out if they were misleading people and the government.

The DG had made reference to a funding model for local government that included gender-based violence and femicide (GBVF) national strategic plan (NSP) and gender responsive planning, budgeting, monitoring, evaluation and auditing (GRPBMEA), as well as water infrastructure priorities. This was not the first time that the matter was discussed with the Director-General, and she asked how the issue of GBV was dealt with at the municipal level, because the programme was new. If the programme did exists, it was a good thing considering the daily issues involving GBV. She asked how the programme could be accessed.

She said that the feedback from the NDMC on what to expect would be beneficial. Municipalities were openly told how the municipalities had no funds in the disaster programme, and she asked whether there had been an improvement, because when the municipalities were engaged with on the disaster, there seemed to be no alignment in the coordination of the programmes from the national, provincial and local governments. She asked for clarification from the Director-General on the programmes, and how municipalities were monitored for improved service delivery and coordination.

Mr Mpumza said that the presentation by MISA on Makhanda was promising, because part of their targets was infrastructure assessment and analysis, while the DCOG was focused on improving section 139 to ensure that the interventions recovered the failed executive legislative functions. The infrastructure assessment by MISA was intended to expose aging infrastructure so that technical planning could take place to ensure that maintenance was being addressed. The issue could be seen in a municipality that was subject to section 139, and the dominant factor was not the failure of the executive function, but the aging infrastructure and technical problems that made the population of Makana frustrated by the failure of the municipality to fulfil its constitutional function. What had the role of MISA had been around the dilapidated infrastructure in the Makhanda local municipality? That intervention had included this municipality, even though section 139 had not resolved the challenges in the municipality of spillages and shortages of water and aging water meters. What technical support had been provided by MISA to Makhanda and other districts? He said that intervention could be extended to the province, because section 139 had been implemented but it had not yielded results.

Mr Ceza asked about the provision of Wi-Fi to benefit the communities, because municipalities often invested in this service. Where there was no such a service, he asked what the role of the Department was in the municipalities where there were no Wi-Fi services.

The Chairperson said that the Department had had six programmes, but now there were five because national Treasury had absorbed the Urban Development and Legislative Support programme into Programme 2: Local Government Support and Intervention Management. The Chairperson asked the Department to explain the rationale for the merging of the programmes.

Ms Mkhaliphi said the Committee had been dealing with most of the issues where the municipal manager was held responsible when there were challenges. She asked when the Department looked into the municipalities when there were challenges. There was a huge crisis in one of Limpopo's municipalities, and if the Department had played its role early, the challenges would have been resolved. How soon did the Department intervene in the municipalities when issues arose? When the Committee conducted oversight in one the municipalities in the Eastern Cape, it did not understand why section 106 had not been implemented as per the recommendation by the Member of the Executive Council (MEC).

Responses

Dr Mmaphaka Tau, Deputy Director-General, NDMC, responded on the impact of the disasters that had happened, and said that the NDMC developed a contingency plan every season which was informed by the medium-term forecasts that were received from the South African Weather Service (SAWS). The possible hazards were observed for every season. The contingency plan was approved by Cabinet on 27 November 2020, and La Nina conditions were forecast to happen, which were associated with normal to above normal rain conditions. All the measures that would be put in place were clearly outlined for all the relevant role players within the Disaster Management Act. The forecast had been fulfilled as projected, but the country was ready because structures had already been established that were working on preventative and mitigation measures in the country. The arrangements employed support from the leadership, but there were mechanisms to ensure that the principals activated the structure.   

Dr Tau said that structures had already been established that focused on preventative and mitigation measures, including quick response to any situation. The programme received support from leadership, which resulted in a mechanism to ensure that the political principal activated the national intergovernmental committee on disaster management. This included the Minister, other ministers, MEC’s, the South African Local Government Association (SALGA) and traditional leaders. He said the storms had resulted in 54 fatalities, and there was infrastructure damage as well as agriculture damage. Despite these fatalities, there had been benefits because some areas were drought stricken. The ground water and dam levels had increased.

He said that the allocation to the NDMC was not enough to address all the issues, which was why Parliament had decided to make the NDMC multi-disciplinary and multi-sector, where all the affected sectors had to set aside a budget and capacity. From the Department of Human Settlement, funds had been allocated for damaged houses, and reprioritisation had taken place in the Eastern Cape. In the Free State, the Department of Agriculture had set aside funds to address the issues, as well as in Limpopo, KwaZulu-Natal, Mpumalanga, North West and the Northern Cape. The technical officials met weekly to brief the principals in order to implement interventions to allocate funds.

He agreed there was a lack of money for disasters, because not enough funds were allocated to the NDMC to deal with the magnitude of the issues in the country. Chapter 4 of the Disaster Management Act clearly stated the roles of the provincial disaster management centres, while Chapter 5 dealt with the municipal disaster management functions. Coordination was the goal, but there was room for improvement. There were structures that met regularly to ensure that there was coordination, and one of the APP targets had to do with supporting municipalities in prioritising disaster risk areas to prevent, mitigate and respond to disasters. The whole value chain helped municipalities to implement their plans to make a practical impact on risk-proofing their services and infrastructure.

Mr Themba Fosi, DDG, DCOG, referred to the rationale for the measures of the two regional programmes, and said that in 2017 there had been an idea to establish another branch of the Integrated Urban Development Framework (IUDF) economic development and planning, as well as all the policy functions, but the budget cuts had resulted in a Deputy Director General (DDG) not being appointed. The branch had been managed by one person, and there had been engagements with Treasury to ensure alignment of the budget structure and the operational structure to avoid two programmes under one branch.

He said the Department of Communications was responsible for the provision of Wi-Fi, and that there have been engagements with the Department in connection with the roll-out of the DDM. An assessment had been done by the Department of Communication across the country to identify areas without connectivity. The financially strong metro municipalities had also been able to assist in the rolling-out of connectivity in the surrounding areas.

On the issues around the DDM and the ageing infrastructure, as well as the mismanagement of funds for infrastructure, he said that the MIG framework provided options that had been implemented in a lot of municipalities that were called "cost reimbursements," which meant that if a municipality had demonstrated the inability to manage its finances, especially the grant, the Department did not allocate funding directly to the municipality but it was allocated based on the work that had been delivered by the service provider.

For the DDM and municipalities that did not have capacity, the Department was working with MISA to perform comprehensive implementation capabilities, which was also based on the work that MISA was able to do where skills were assessed, as well as the state of infrastructure and the processes and systems in the municipality, so that the capability to perform functions was evaluated. The comprehensive assessments would be rolled-out to 21 municipalities. The assessments had to inform all of the capacity building programmes, because the challenges of the districts would be determined, as would the type of support that was required.

The MIG framework changes, as mentioned by the MISA CEO, included a 10% provision for repairs and maintenance to deal with some of the water challenges and losses due to poor maintenance by the municipalities. 5% would be allocated for asset management to encourage municipalities to develop asset management plans and ensure that they received the required support.

He said that there were two targets in the APP that focused on the monitoring framework which would outline clear indicators of how to monitor the implementation of the DDM. The other target was on the information management system (IMS), which was an information communication technology (ICT) enabler that would be used to ensure that during monitoring there was a system that would assist the process. The dashboard of the system would ensure that challenges were detected early, with clear support systems.

The smart city plan's programme framework had been concluded, and incorporation of the smart city principles were still being looked into.

The GBV programme was one of the priorities that had been included in the MTSF because GBV had been declared a pandemic. The Department of Women, Youth and Persons with Disabilities had developed a set of indicators that must inform all the Department’s programmes. The Department wanted to ensure that there was cooperation with municipalities to develop the One Plan, and to incorporate some of the indicators. Districts with high levels of GBV cases and reports had been identified and a partnership with the United Nations had helped to identify areas that required support. The approach involved many stakeholders, such as the Departments of Health and Social Development.

On the interventions at municipalities that did not address the root causes of challenges, he said that in the previous presentations to the Committee it had been highlighted that the Section 139 interventions were not corrective. The Municipal Systems Amendment Bill would be addressing the matter, and the DDM would also address the issues of the root causes and identify them. If the state of infrastructure was known in each district, then the Department would be able to look at the long-term infrastructure plans and identify the immediate challenges in municipalities that needed to be addressed to resolve the ageing infrastructure and leaks.

On the role of COGTA in dealing with some of the challenges in municipalities, he said that the IGR architecture system considered the provinces as the first point of call in terms of responding to some of the challenges. The Department also received correspondence from the communities and provinces involved in drafting solutions to the issues that had been raised by the communities. The province had the responsibility to ensure proper monitoring systems, and had to be more responsive and agile in addressing challenges.

Mr Mbulelo Sigaba, Chief Director: Municipal Finance, COGTA, said that the 5 000% increase was linked to the local government elections that would take place in October 2021, because provisions of R350 million had been made for the leave gratuities of the current outgoing councillors. The R6 million was already the operational budget for municipal governance. The amount would go back to normal in the next financial year unless there were outstanding payments.

He said that financial viability was central to the functionality and effectiveness of the local government system. Municipalities had to be financially viable and this was a joint responsibility of National Treasury, national COGTA and all the provincial constituencies. Initiatives would be facilitated to ensure that financial viability, revenue management and audit outcomes for local government were in line with the new DDM through the utilization of the municipal systems' improvement grant programme.

In the previous financial year, the Department had conducted a lot of workshops that focused on the local government fiscal framework, because the local government White Paper revenue assumptions indicated that local government would receive 9% of the national allocation. 73% would have to be raised by the municipalities from their rates and municipal services, but this had not been achieved so the Department was looking at alternative ways. The powers and functions of municipalities had been looked into, and it was found that some municipalities were performing functions that were delegated by provinces and that funding was not adequate. Most of the municipalities were in rural areas and did not have a revenue base which was why alternative sources of funding were considered. Some municipalities had bloated structures, and they used the equitable share to finance the increases in expenditure. All these issues were being reviewed, together with Treasury.

A memorandum of understanding had been drafted by COGTA and Treasury which would help strengthen the joint actions and collaboration to ensure a coordinated approach in assisting municipalities. The focus was on governance, institutional issues and service delivery, and Treasury should focus on financial management and audit outcomes. The Department was also looking at developing a programme of action on how to ensure municipalities could maintain existing assets and invest in new infrastructure. There was a workshop planned for May and June, where there would be a presentation to the Budget Forum which was chaired by the Minister of Finance, the COGTA ministry and SALGA, where recommendations would be made with MISA.

Regarding the reduction of the equitable share, he said the reduction in economic activity of the country on the collection of revenue by the South African Revenue Service (SARS) had affected the revenues of municipalities, so there had to be reductions in the municipalities, especially the metros and secondary municipalities. Rural municipalities were not affected by the reductions.

On the challenges around Makana, Mr Ndalase said that as its population had grown, negligence on upgrading the existing infrastructure had increased, which had contributed to the constraints in the system. He gave an example of the water treatment plant in Makana that was designed to operate at eight megalitres per day, but it was operated at 13 megalitres per day, which was 50% more than its design capacity. MISA had then conducted a detailed assessment of the infrastructure, which had assisted in unlocking R20 million for water conservation, and the demand management practices funding was approved by the Department of Water and Sanitation. This had also assisted with activities like conducting water balances, closing off leakages and the reduction of water losses. During the upgrade of the water plant to 20 megalitres per day, there had been consistent water bursts at the plant. MISA had intervened by providing Makana with a refurbished pump from the treatment plant. R160 million was allocated by the Premier's office in the Eastern Cape for the replacement and upgrading of the sanitation services. Sewer jetting services were also provided by MISA to alleviate blockages. A year later, a senior MISA engineer had been deployed to Makana to act as a Director for Technical Services, which had brought about stability. The water treatment plant was now fully functional and was meeting the demand. Proper catchments within Makana had been implemented so that the maximum water that was required could be extracted. A similar approach was used for the Ugu district municipality because most of the challenges were around water losses with a high demand. Ugu had been requested to reprioritise the recommendations of the water demand plan. The situation was being monitored.

Mr Vimba said that in Makana, MISA was also assisting with the repair of roads, and a service provider had been appointed to address the issue.

Mr I Groenewald (FF+) asked MISA about the number of municipalities that have infrastructure maintenance plans, because the Minister once provided the following information:

Province           Intended maintenance plans      Fully implemented plans

Free State                       1                                            0

North West                     2                                            0

Northern Cape               14                                            3

Eastern Cape                14                                            0

Mpumalanga                   6                                            1

KZN                              50                                            4

Limpopo                          7                                            0

Gauteng                          4                                            1

Western Cape               17                                            3

He asked for MISA’s view on the status of these municipalities.

Mr Ndalase said that the context of the APP sought to address what had been raised by Mr Groenewald, because from the database that was received from Treasury, only 1% was spent on repairs and maintenance of existing municipal assets. MISA had then recommended that the MIG framework should start to prioritise the maintenance of assets, which was why the 10% allocation had been made for asset management, and 5% for the development of asset management plans. 30 districts had at least operating and maintenance plans. There was hope that the reforms in place would yield success in addressing the challenges. Fortunately there had been a few successes, and the Department of Water and Sanitation (DWS) in the Eastern Cape had approved of four districts to prioritise the 10% on asset management to improve the care of existing assets. 

Mr Groenewald said that the responses from MISA were the same responses that had been given two years ago. The DDM was a collaboration of different departments, and the first thing that needed to be in place was the plans. He asked how the Department would address all of the issues if the plans were not in place.

Mr Fosi agreed with Mr Groenewald that planning was a critical part of the DDM, and the design of the One Plan was to institutionalise long-term planning, which had to express the clear commitments of the various spheres/sectors. This had started before the DDM to pilot some of the interventions when the Urban Development Grant was established, to incentivize municipalities to start developing long-term infrastructure plans and long-term sustainable financial plans, including asset management plans. As part of the grant, support had been provided to municipalities that were unable to address the issues. The plans had to be fully funded and all the different departments had a plan that they were each funding.  

Mr Groenewald said that the same response had been given on 11 February -- that there were no plans in the provinces -- but it had just mentioned that the provinces were the starting point. It was unclear where the municipalities stood, based on the response that had been given by the Minister.

Mr Fosi said that municipalities were at a different level and had different capacities, because there were municipalities that were struggling and support needed to be targeted to these municipalities to develop and fund the plans. 

Mr Groenewald quoted what had been said by the Minister: “Data collected by COGTA from provinces reveals that 45% of all municipalities in the country have infrastructure maintenance plans. Across the different types of municipal services, only 10% of those that have plans have implemented them fully. According to the 2018/2019 Auditor-General's report, 41% of audited municipalities did not have approved policies and routine maintenance of water and sanitation infrastructure, where 27% did not have road maintenance plans. The state of affairs is concerning since the provision of reliable services is largely dependent on the capacity of the municipality to incorporate and maintain infrastructure.” He said that after 26 years of local government, there were 27% that did not have road maintenance plans, and only 10% that had implemented the plans. The Department had to work harder, because 10% of municipalities implementing plans was a recipe for a failed DDM.      

Mr Vimba said that the positive thing was that government was aware of the state of infrastructure and where there were challenges. An assessment had been done and the report was a true reflection of what was happening on the ground, which was why the MIG framework had been reformed to balance the funding of new infrastructure and existing infrastructure. 

The Chairperson said that reforms and plans were two different things, and asked what would be done differently considering the state of municipalities misusing the grant allocations. It was as if there were no mechanisms in place. She asked whether there were plans in place.

Mr Vimba said that Mr Fosi had already highlighted the instruments that were used to address these issues. Some of the reforms to the MIG were that MISA must approve all the plans that would be funded. The implementation of projects was monitored, and the MIG in other municipalities had been used for other things because of instabilities and challenges.

The Chairperson asked for the instruments to be shared with the Committee by the end of the following day.

Mr Vimba said that the instruments would be shared.

The Chairperson said that the Auditor-General had mentioned that in most of the municipalities, the grants were being misused.

Mr Sigaba said that there was a scheduled workshop between April and May 2021 on infrastructure and asset management, and that MISA would be leading the workshop. The final recommendations would be presented to a Lekgotla, and the Committee was welcome to be part of that meeting.

The meeting was adjourned.