In a virtual meeting, the Department of Sports, Arts and Culture (DSAC) gave a progress report on implementing the 5% Municipal Infrastructure Grant (MIG) ringfenced for sport. It outlined the allocations for the ringfenced programme from its inception in 2016/17, the projects and project progress according to province. It noted where projects were stopped or cancelled for various reasons. The initial allocation was R300 million; however, from 2018/19, the allocation decreased due to budget constraints. By 2022/23, 193 municipalities had received allocations with an overall total of R1 901 858 000. The challenges were the mismanagement of funds by municipalities, poor contract management, inadequate technical support to municipalities, and site identification for building facilities. The Department proposed recommendations to increase the budget allocation to R400 million to increase capacity, amend the MIG Framework and building of built environment capacity by provincial departments responsible for sports.
Committee Members asked about project delays and what action was being taken to fast-track these; if security at sports facilities was taken into consideration due to the large number of cases of vandalism and theft; steps taken to address capacity constraints; reasons for requesting a higher budget considering current fund mismanagement; and oversight and monitoring of the use of funds by the municipalities.
In addressing the lack of operation and maintenance of infrastructure after completion, National Treasury recommended that municipalities indicate in project applications how they planned to operate and maintain the sports facilities in the long term. It suggested improving collaboration between DSAC and CoGTA and noted that often the best location for building sports facilities was at schools which were not part of CoGTA policy.
SALGA said that the DSAC report painted a dire picture, thus they could not, as government, continue in the same way they had been, hoping that things would change. It would respond in a future meeting about recommended changes to policy, process and systems.
The Chairperson expressed disappointment at the late submission of presentations by the South African Local Government Association (SALGA) and National Treasury. She raised the importance of submitting presentations prior to the meeting for Committee members to read through, understand, and engage with accordingly.
Deputy Minister’s opening remarks
Ms Nocawe Mafu, Deputy Minister of Sports, Arts and Culture, asked that DSAC be allowed to make its presentation regardless of the late submission due to the importance of the meeting agenda. She said that the discussion is critical as it relates to the infrastructure of sports facilities in the country. She handed over to the Department to make the presentation and stated that she would return with her closing remarks should she not be negatively impacted by load shedding.
Ringfenced MIG Programme implementation: DSAC progress report
Mr Lebogang Mogoera, DSAC Chief Director for Infrastructure Development, said that the presentation aimed to give the Committee a sense of the performance of the MIG programme since its inception in 2016/2017. The Programme was as a result of the concern by the sector and Portfolio Committee that the 5% allocated from the MIG was not being utilised appropriately. As a resolution, it was proposed that 5% be ring-fenced and reallocated by DSAC. The allocation is made according to the project needs submitted by municipalities.
The allocation of funds was as follows since inception of the ring-fencing intervention:
• 2016/17 – 30 municipalities = R300 000 000
• 2017/18 – 34 municipalities = R300 000 000
• 2018/19 – 30 municipalities (2 repeats: Gamagara and Lekwa) = R273 000 000
• 2019/20 – 22 municipalities (1 repeat: Kamiesberg returned) = R266 000 000
• 2020/21 – 23 municipalities (3 repeats: Masilonyana, Polokwane &Mahikeng) = R255 000 000
• 2021/22 – 29 municipalities (2 repeats: Polokwane and Mahikeng) = R255 000 000
• 2022/23 – 27 municipalities (9 repeats: Emthanjeni, Mahikeng, Magareng, Umsobomvu,
• Tokologo, Masilonyane, Mantsopa and Emalahleni) = R252 858 000
Of the 205 local municipalities, 193 had received allocations by 2022/23 and the estimated total amount allocated over the past seven years amounted to R1 901 858 000. The number of beneficiary municipalities were 178, while 27 were outstanding.
Mr Mogoera gave insight into the allocations of funds since 2016/17 through a summary of the performance of the projects that ringfenced funds were allocated for (see document).
The following challenges were noted by the Department:
• Ring-fenced MIG funds being used for other priorities impacted the timeous delivery of the sports infrastructure projects
• Poor construction contract management in municipalities compromising the effective monitoring and management of resolution of contractual disputes and timeous completions
• DSAC is disempowered to impose any penalties (withholding of tranches in instances of non-compliance by municipalities) because of the nature, conditions and governance of MIG.
• Loss of significant funds allocated during stopping and reallocation process by the Department of Cooperative Governance and Traditional Affairs (CoGTA). The sports infrastructure funds lost during this process are not reallocated to other performing sports infrastructure projects, instead funds are reallocated to other uses elsewhere.
• Decline of registration of some projects on the basis that MIG ca not be used to build sports facilities on sites owned by public schools - even where there is a general consensus among affected communities, municipalities, and schools through Memorandum of Agreement (MoA) to ensure such facilities will be accessible to all. [EPG report recommends focus on delivering sport facilities in schools as well as the bedrock of the sport and recreation system)
• Decline of registration of some projects (e.g. Langeberg) on the basis that site identified is accessible to both non-poor and poor households, and MIG, even for sport facilities, is restricted to only poor households, otherwise municipalities must counter-fund if non-poor households were to benefit. DSAC holds a different view on this matter but also this reasoning defeats its mandate of promoting Social Cohesion through creating spaces that facilitate interaction and integration among different races, genders and classes
• Decrease of budget from R300 million compromises supply of sports facilities to meet facility demand to support transformation targets in various sporting codes (e.g. swimming)
• Inadequate technical capacity in provincial departments of sport to ensure adequate support and monitoring of the sport infrastructure projects
• Poor alignment of supply of facilities to sport development programmes/plans in provinces, leading to non-use or opening of completed facilities
• Lack of enforcement of 5% earmarked for sports infrastructure to ensure adequate supply and maintenance of sports infrastructure
The Department subsequently made the following recommendations:
• Finalisation of the draft MoA between CoGTA and DSAC to facilitate mechanisms of recourse where municipalities do not comply and ensure DSAC plays a role in reallocation of funds stopped from sports infrastructure projects
• Amendment of such provisions in the MIG Conditional Framework that prevents delivery of sports facilities in school sites and “social cohesion sites” where such sites make spatial, developmental, social transformation and financial sense
• Increasing the ring-fenced MIG sports infrastructure budget to a minimum of R400 million from the earmarked 5%, as much of the latter is, in any case, not used for the intended purpose of sports facilities by municipalities
• Enforcement of use of 5% for the intended sports facilities’ purpose by CoGTA through decline of any municipalities’ Project Implementation Plans (PIPs) that do not allocate such 5% to sports infrastructure projects
• Enforcement of use of 5% by SALGA by making delivery of sports facilities by local government, in line with Schedule 5B of the Constitution, a standing item of some of its oversight meetings
• Building of built environment capacity by provincial departments responsible for sports in line with their responsibilities imposed by the MIG Conditional Framework
Mr B Madlingozi (EFF) expressed disappointment at the stadium built by the Enoch Mgijima Municipality in the Eastern Cape in October 2021 for R15 million while the residents of the municipality had to travel 15km to get water, which they’d done for the past 15 years. He questioned the wasteful expenditure by the Department and the disrespect towards the community of Komani as the stadium itself did not have water.
Mr Madlingozi asked what was happening with the HM Pitje Stadium. The last time the Committee had oversight, the Department was at odds over the demolition cost payments to the company contracted to demolish the stadium. The Tshwane residents were still angry as the stadium had been taken over by drug addicts, who were causing mayhem among the Mamelodi community. What was happening with the unfinished projects that were supposed to bring relief to the Mamelodi residents? What was the progress on the contracts awarded on 15 December 2021 to rebuild the stadiums?
Ms R Adams (ANC) asked if DSAC had assessed the security needs for the sporting facilities with the relevant stakeholders in light of the threat of vandalism and theft at facilities. Had DSAC conducted a study to understand why facilities had become “white elephants”? In areas where the sport component of the MIG Grant is underspent, did National Treasury involve DSAC in supporting projects which could be undertaken to avoid underspending? How was DSAC working with non-performing municipalities to spend on sports beyond the MIG grant?
Mr M Zondi (ANC) questioned how DSAC was dealing with the dysfunctionality of municipalities in the implementation of their projects? In terms of the Environmental Impact Assessment (EIA), what was the cause of delays and how had they planned to deal with the delays considering that it was a problem that had been prevalent for a few years, especially in rural areas. What efforts had been put in place with all stakeholders to avoid the disruption caused by violence in all infrastructure programmes? Of the baseline and ringfenced MIG allocations received by DSAC, which one performed better?
Ms D Sibiya (ANC) asked what DSAC was doing to ensure that a higher variety of sporting codes were introduced in historically disadvantaged areas as opposed to netball and soccer being the most common codes. What percentage of infrastructure was supported which had fallen into a state of disrepair since the inception of the MIG?
Ms V Malomane (ANC) enquired about the reasons for the non-enforcement of the 5% of the MIG earmarked for sports infrastructure. What were the challenges faced? On the threat of vandalism and theft from sporting facilities, had DSAC considered enforcing security measures to mitigate against the threat? She supported the recommendation in the report about the building of sporting facilities in schools that are not only for soccer and netball. She requested that Mr Mogoera visit the Matibidi area as there were no sporting facilities including at schools, and to build a sports facility in the area.
Mr D Joseph (DA) followed up about the HM Pitje Stadium and requested feedback as it was a 2010 World Cup legacy project which was in the phase of demolishing. He expressed concern about the unspent money, considering all the plans and projects in place. He asked if the municipalities where theft and vandalism took place had a budget for security to protect the infrastructure and ensure that the money spent to build them did not go to waste and so community members could enjoy the facilities.
Mr Joseph highlighted extortion in the construction industry for stadium building projects. Considering the dysfunction in various municipalities, he suggested that Treasury and DSAC should step in to ensure the good management of allocated finances. Referring to the sites that do not belong to the municipalities in the presentation, there are certainly examples of public-private partnerships in building sports facilities in schools that had underutilised grounds as the grounds were public property. He emphasised the importance of the work done by DSAC to develop sporting facilities to promote social cohesion and nation building.
Ms V van Dyk (DA) asked how much money was paid to the project that was cancelled (slide 3) and if there had been any accountability for those funds. Why were 2016/17 allocations to the Eastern Cape still under investigation? Were the appointed contractors that did not fulfil their obligations red-flagged by municipalities? Was a database kept by municipalities and DSAC of contractors that did not honour their contractual obligations? She asked if DSAC performed any pre-checks for the projects in Northern Cape and if the funds made available were monitored and evaluated.
Ms van Dyk asked who was responsible for monitoring the project in the Free State where the contractor supposedly experienced financial challenges. How was the contractor pre-approved in the first place considering these financial challenges? What was the update on the investigation being carried out in Mpumalanga? Was the full R9.2 million given to the Eastern Cape project contractor (slide 9) which was only 50% complete? What were the compelling reasons that the sporting facilities could not be built at public schools using MIG funds, given that the schools needed these facilities, and how could this challenge be overcome?
Mr B Luthuli (IFP) asked how it came to be that a project that began in 2016 to build sports grounds was still not concluded, although funds were allocated annually over the past couple of years.
Mr T Mhlongo (DA) asked how best DSAC could take the responsibility for building sporting facilities away from municipalities considering their dismal failure. What was the role of the Sports Trust in infrastructure provision? Why were municipalities failing to implement their Integrated Development Plans (IDPs)? Were intergovernmental relations between the national, provincial, and local government working or failing?
The Chairperson expressed concern about no projects being completed over the past financial years in the Northern Cape. She suggested the Committee motivate for an oversight visit to go into provinces where projects had failed. Concerning the two Directors-General who were meeting to sign and fast track the new Memorandum of Understanding (MOU), what was the progress on that process? What was the reason for DSAC requesting R400 million instead of R300 million? What would be different considering that the funds currently allocated were not being used efficiently? What measures could be taken by Treasury if the funds were not doing what they were expected to do? What were the provisions of the Public Finance Management Act (PMFA) on that? She stated that part of the reason certain social issues, such as GBV and drug abuse were perpetuated was due to the lack of sporting facilities.
Ms M Khawula (EFF) said that oversight was necessary not only in the areas where projects had failed, but also in the areas claimed to be successful. Although the presentations suggested that projects had been completed, that had not always been the case, therefore oversight needed to be carried out on those projects as well. She implored SALGA to ensure the appropriate use of allocated funds as MECs of Sports, Arts and Culture, Mayors and Councillors were not using the monies received to build sports facilities as required. She requested DSAC members to be visible at and participate in cultural events as they were a Department of Culture as well.
The Deputy Minister suggested that Treasury and SALGA first respond to the questions directed to them prior to the response by DSAC.
Mr Letsepa Pakkies, National Treasury Director: Local Government Fiscal Framework, said that the reason the MIG could not fund sports projects in schools is not due to a framework issue, but rather due to the MIG policy, which CoGTA would be better placed to speak to. He agreed that it was unusual for a sports project to take more than seven years to finalise. This also made it difficult to make a recommendation for the allocation of additional resources.
On the lack of proper water and sanitation in certain communities, a basic right in the Bill of Rights in the Constitution, he stated that the MIG funds were allocated to municipalities to address such basic needs for communities as identified through the IDP process. There was a rigorous process that all sector departments were to participate in which they informed about the MIG allocations made using the IDP as the main source of projects identified by the communities.
On the enforcement of the 5% allocation, the report they had received indicated that where there was a lack of capacity at a provincial level to play a meaningful role in the process; there would be less of a prioritisation of sports projects from the 5% MIG allocation. Thus there should be a concerted effort from national and provincial sport departments to play a meaningful role in motivating municipalities to increase investment in the sport component from the 5% allocation. The issue is that municipalities had been spending more than what had been allocated to them.
Mr Pakkies recommended that the sport component of the MIG guarantee that the funds are spent effectively and efficiently, as municipalities had escalated prices for no good reason. He suggested that each sector provide a master plan including guiding principles on what the funds could and could not be spent on, as municipalities could find themselves exploited by service providers due to the lack of necessary guidance from the policy setting institutions.
Addressing theft and vandalism, Mr Pakkies said that this emanated from building infrastructure in communities or areas that did not appreciate the facilities. The government’s response had been to continue building; however the need for maintenance was often not catered for. He implored that the MIG Programme make an effort to communicate the need for maintenance of these assets to municipalities, who often expected the national department to be responsible for them.
There were procurement delays that made the process seem cumbersome. When this ringfencing process was initiated, there was funding of R24 million to assist DSAC in building its own internal capacity to play the support role to fast track projects. However, as of late last year, there had still been capacity constraints that contributed to the lack of thorough oversight required by the municipalities. DSAC is only able to provide oversight on specialised needs, although it is required on the general need to oversee the 5%.
Mr Pakkies stated that Treasury was leading the Grant review process, which included reviewing all the conditional grants in the system and considering how they could make them work better. They would be happy to share the relevant findings and reforms emanating from the process in future. The guidelines indicated that there should not be major changes in the current financial year’s budget because of the review currently taking place in the sector departments and provinces.
Mr Misaveni Ngobeni, National Treasury Chief Director: Urban Development and Infrastructure, explained the stopping and reallocations process. There was a criterion that stipulated where municipalities failed to spend a minimum of 40% of their allocation by the midpoint of the municipal financial year, the Department could propose that a portion of the allocation be stopped and reallocated to other municipalities. The process was carried out annually with other sector departments, including CoGTA, identifying the underspending municipalities and requesting presentations to motivate why a portion of their allocation should not be stopped. Where funds were eventually stopped, it would be for various reasons, including poor planning by the municipality or late procurement. Once the funds were stopped, the Department would recommend where the funds are reallocated. Reallocations were typically to municipalities performing well, deciding which projects they wanted to use the reallocated funds. Municipalities were responsible for the prioritisation, planning and ownership of sports infrastructure projects. However, the challenges faced were lack of timeous planning and undertaking proper procurement and project implementation, which led to the issues raised in the meeting. Consequently, a fine balance needed to be found between project planning, procurement and implementation until completion.
Ms Wendy Fanoe, National Treasury Chief Director: Intergovernmental Policy and Planning, recommended that in addressing the lack of operation and maintenance of infrastructure after completion, the Committee should consider requiring municipalities to indicate in their project applications how they planned to operate and maintain the sports facilities in the long term. This could be explored when having future discussions about the Conditional Grant Framework.
She suggested improving the collaboration between the national department responsible for administering the grant and the department responsible for the MIG which is CoGTA. Collaboration between municipalities and the provinces concerned would contribute to overcoming the key issue of finding places to build sports facilities, as some of the best locations identified were schools.
Mr Mthobeli Kolisa, SALGA Chief Officer: Infrastructure Delivery, Spatial Transformation and Sustainability, remarked that while the DSAC presentation was detailed and pointed to specific challenges in specific municipalities, it would be best for SALGA to respond after having engaged with the identified municipalities to provide responses based on the factual evidence collected. He requested that the Committee allow them to present a full account in a future meeting, including their views on recommendations on policy amendment. The report painted a dire picture, thus they could not, as government, continue in the same way they had been hoping that things would change. Therefore, their future response would include the changes that need to be made to processes, systems, and policies.
At a high level, SALGA’s starting point was Section 154 of the Constitution which mandates national and provincial government support municipalities. Some municipalities did not have the technical capacity for implementation thus it is necessary to capacitate national and provincial government to have the technical capacity to oversee and support municipalities in the implementation of their programmes according to the required standard.
On vandalism, which resulted from facilities being white elephants and not utilised, Mr Kolisa stated that municipalities need to enter into agreements with local sports federations as to how they would make use of the facilities as the end users. SALGA was in the process of helping municipalities recognise the need for and importance of building capacity to protect infrastructure and have appropriate response mechanisms, not only for sports facilities but also for public facilities such as water pipelines and public lights. SALGA would be meeting with the Municipal Infrastructure Support Agent (MISA) to discuss supporting municipalities, and a report would be launched that spoke to the role of municipalities in protecting their infrastructure. The outcome of the meeting would be communicated to the Committee.
The Chairperson requested that DSAC also discuss a previously mentioned proposition that was rejected by municipalities to provide capacity support by using specialists. She requested that should there be new leadership in SALGA or CoGTA, they should be made aware of this information.
Mr Mogoera replied about the Enoch Mgijima Municipality stadium, stating that the project was funded out of the municipality’s baseline MIG funds as opposed to the ringfenced MIG funds allocated by DSAC. Projects like that were typically not overseen by national government as delivery of such facilities remained the responsibility of municipalities to implement accordingly – the provincial counterparts were meant to monitor the projects supported due to lack of skills capacity in the built environment fields.
The HM Pitje Stadium in the City of Tshwane was funded by the Urban Settlement Development Grant (USDG) which is a space that DSAC still needed to get into to ensure that they served municipalities as part of its mandate. Two weeks prior to the meeting, Mr Mogoera and Mr Petela physically went to the site and assessed that there was still construction taking place. Only the core structure had remained as there had been demolishing and removal of the steel structure and the pitch. While the provincial department had appointed contractors for the demolition, the work had stopped due to contractual disputes and the matter would be followed up by DSAC. He requested that Mr Petela provide the necessary feedback as he normally attends meetings on those issues.
On ‘construction mafias’, he replied that in attempting to mitigate this risk, DSAC encouraged project steering committees that should be set up at the level the projects are taking place. These should fairly represent the relevant stakeholders, including the community, through the community liaison officer (CLO). He also encouraged municipalities to approach law enforcement agencies to assist in these cases of criminal activity.
On security facilities, he replied that DSAC would build into the existing template that municipalities use to complete and submit their business plan when applying for funding and how they plan to safeguard the assets. There already was an inclusion of an operation and maintenance budget requirement, where the municipality had to indicate the availability of budget over a period of three years within the template; however it was not being implemented.
Mr Mogoera indicated that the reason for underspending on sports infrastructure was often due to infrastructure funds being used for other expenditure such as payment of salaries. Subsequently, this impacts the seamless implementation of projects as and when funds are required. Other issues included the limitation in capacity to enforce proper contract management between the municipality and service providers, which resulted in unnecessary delays.
Due to sport federations being in the domain of DSAC, planning needed to be strengthened moving forward on the use of facilities.
On dysfunctionality within municipalities, Mr Mogoera replied that often allocations were delayed because CoGTA would find allocating funds to certain municipalities risky following their presentations. Delays in the EIA process were often caused by zoning issues, where rezoning certain sites to sports facility sites was a time consuming process. EIA would be integrated moving forward to include confirmation by the municipality of the EIA status of the site identified. This is currently being implemented.
In comparing the performance between the baseline and ringfenced MIG allocations, some municipalities performed well in implementing the 5% in building good facilities. However there have been cases identified of extreme waste. Among these were projects in Sasolburg, Enoch Gijima, and another in the North West. They have also identified where baseline funds were not used for sports infrastructure at all. The main advantage of the ringfenced funding, irrespective of its challenges, was that the Department followed the money until it was spent.
Mr Mogoera said that DSAC had noted the need to incorporate other sporting codes when establishing infrastructure and indicated that they had contacted Swimming SA to make recommendations for the municipalities to build swimming pools. Moving forward, they would approach these recommended municipalities to consider submitting business plans. He agreed that there should not be an issue with building facilities in schools and DSAC would intentionally pursue changing any constraints in the framework policy.
Due to connectivity issues, he could not clearly hear all the comments and questions by Ms van Dyk. The funds that were stopped were taken back to the provincial department responsible and reallocated according to identified priorities for various reasons. DSAC was still pursuing cases of unfulfilled contractual obligations by contractors and would share further when a more tangible report can be given.
On the reasoning behind the request for an increased allocation to R400 million, Mr Mogoera said that it was to enable the scale of demand to be met as the current allocation was limiting. The Project Management Unit (PMU) that was intended to support municipalities had only existed for a year as it was subsequently rejected at the municipal level, thus relevance was lost.
Mr Songezo Petela, DSAC Director: Infrastructure Support, replied that the HM Pitje project was paused due to disagreement on the contract entered into. DSAC has allowed the relevant parties to resolve the issue and said they would intervene upon their failure.
Addressing capacity, they had five technical staff members who were focused on the implementation of MIG-related projects. They had a total of 9 staff members, including non-technical members, working with MIG thus the issue was attended to. In supporting the implementation of the projects by municipalities, they would reflect on the past financial years, identify challenges, and come up with solutions.
Mr Petela suggested that in securing facilities, municipalities should not only consider the physical safeguarding of assets but also focus on getting buy-in from the community motivated by the establishment of a steering committee. This is recommended to municipalities at the beginning of all projects. Following design reviews, they were encouraged to engage the communities and inform them about what would be achieved in the project with the budget available.
There was a need for funding to be increased, as seen by the municipalities co-funding most projects they had achieved due to the allocations being insufficient for the needs of the community.
Ms Sumayya Khan, DSAC Deputy Director-General: Recreation Development and Sport Promotion, replied that the Sports Trust does build sports facilities, but they were confined to multi-purpose sports courts built in schools. They had an agreement with the Trust to provide funding for ten sports courts to be built annually, which also mobilised resources from the private sector as part of their corporate social responsibility.
On the capacity offering rejected by municipalities, she explained that because a smaller amount was received to build capacity than was initially requested, a clause was put in the Conditional Grant Framework for municipalities to appoint transversal professional service providers from their budget, but the municipalities were not amenable and wanted to do their own procurement. As such, DSAC had to remove the requirement from the framework.
Due to the large number of municipalities and wards within municipalities, some still had to receive the grant for the first time. The Department did not have the full spectrum of the needs in all those areas. There was still a long way to go in addressing the backlog of infrastructure needs in the country.
Deputy Minister remarks
Deputy Minister Mafu commended the questions raised and comments made by the Committee and applauded the responses by SALGA and National Treasury. She supported the need for a follow-up meeting as recommended by SALGA.
She highlighted the importance of sports facilities in building relations, improving social cohesion, and addressing social ills. Dealing with intergovernmental relations was important as most of the issues discussed emanated from municipalities not working well with the Department. The District Development Model needed to be considered and discussions had on how to improve it. The MIG specifically related to non-metro municipalities, as metros would be funded by the Urban Settlement Development Grant, which forms part of Human Settlements.
The Deputy Minister’s connection was interrupted; however upon her return, she indicated that she had concluded her remarks].
In conclusion, the Chairperson recommended a collaborative effort between the Committee, DSAC, CoGTA, the Standing Committee on Appropriations, and the Portfolio Committee on Basic Education and Sports, Arts and Culture MECs to address the issues raised and chart a way forward. She agreed to have a follow-up meeting for SALGA to make presentations. She thanked the Deputy Minister, DSAC, SALGA and Treasury for being present at the meeting.
The Committee considered and adopted the minutes of 09 and 13 September 2022.
The meeting was adjourned.
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