Municipal Demarcation Board, National House of Traditional Leaders, Local Government/Water SETA: annual reports

Meeting report

LOCAL GOVERNMENT PORTFOLIO COMMITTEE
11 October 2004
MUNICIPAL DEMARCATION BOARD, NATIONAL HOUSE OF TRADITIONAL LEADERS, LOCAL GOVERNMENT/WATER SETA: ANNUAL REPORTS

Chairperson: Ms N Ntshulana-Bhengu (ANC)

Relevant documents
Presentation by Local Government Water and Related Services SETA
National House of Traditional Leaders Annual Report 2003/2004
Municipal Demarcation Board presentation
Local Government Water and Related Services SETA Annual Report 2003/04
Municipal Demarcation Board Annual Report 2003/2004 (shortly at www.demarcation.org.za)

Local Government, Water and Related Services SETA delegation: Mr S Jappe: Western Cape Provincial Manager; Ms N Dube: Water Chamber Manager; Mr E Mnyakeng: Human Resources and Corporate Manager: Mr S Nkosi: CEO and Mr T Deysel: Deputy Chairperson
Municipal Demarcation Board delegation: Mr H Monare: Manager and Mr R Somanje: CFO
National House of Traditional Leaders delegation: Nkosi Mpiyezintombi Boy Mzimela: Chairperson; Nkosi F Kutama: Deputy Chairperson; Nkosi C Mathebe: Member of the NHTL Management Committee; Kgosi Simane Victor Suping: Member of Management Committee; Prince Z Makaula, Member of Management Committee; Morena M Mopeli, Member of Management Committee; Mr M Gobe, CEO and Hosi P Ngove: Chair of NHTL Internal Arrangement Committee

SUMMARY
The Local Government Water and Related Services SETA presented its Annual Report and outlined its strategic projects, the National Skills Development Strategy targets, its areas of under-performance and the challenges it faced. During the discussion Members sought clarity on:
- the Minister's response to LGWSETA's reasons for the problems it encountered;
- what was being done to address the source of the problems in critical areas;
- the difference between LGWSETA and the National Skills Development Strategy objectives;
- whether an impact study has been commissioned;
- whether LGWSETA has any system in place to accommodate traditional institutions;
- how the R79m allocated for community development workers would be distributed nationally;
- the extent to which its challenges have been shared with relevant stakeholders including SALGA, the Department of Labour, Department of Provincial and Local Government and the Department of Water Affairs and Forestry
- the areas in which community development workers were operating.

The Municipal Demarcation Board presented its Annual Report outlining the structure of its board and staff, programmes and projects undertaken and its strategy for 2004/5. The primary concern was that the MDB was on course to run out of funds by November this year - leaving four months still to go in the financial year. Questions that arose were:
- if Parliament's failure to pass any legislation on cross-boundary municipalities this year would affect plans to phase in the new boundaries;
- why nothing has been done regarding its funding running out;
- if cross-boundary municipalities would be abolished and redesignated within the existing provincial boundary, or the existing municipal boundaries;
- if non-viable municipalities would be redemarcated for the upcoming local government election;
- if the MDB was on track to hand over the demarcation to the Independent Electoral Commission in April 2005;
- if traditional authority boundaries have been accommodated in the demarcation process;
- if consultants were being used to deal with ongoing technical corrections and was it not possible to scale down on consultant costs;
- if the resolutions taken at the recent DPLG and SALGA conferences have been incorporated into the work done by the MDB;
- if steps had been taken to correct the concerns raised in the Auditor-General's report and
- a request for a breakdown of the office expenses and Board member's salaries.

The National House of Traditional Leaders indicated that they did not meet often enough with the Committee, that it continues to operate without its own chamber and that it needed financial autonomy. During the discussion the NHTL was asked to indicate the kind of budget it would require to enable it to properly perform its functions, and clarity was sought on its relationship with the relationship between itself and the NHTL and Municipal Demarcation Board.

MINUTES
Presentation by Local Government Water and Related Services SETA
Mr S Nkosi, CEO: LGWSETA, conducted the presentation (document attached) which outlined the overview of the sector, the LGWSETA mandate, the institutional fundamentals, its strategic projects, the National Skills Development Strategy (NSDS) targets, its areas of under-performance and challenges it faced.

Discussion
Mr S Mshudulu (ANC) questioned whether the LGWSETA would have been in this position if it had spoken out earlier, and asked why it waited for the Minister to make an intervention.

Mr Smith asked LGWSETA to indicate the Minister's response to the LGWSETA's reasons for the problems it encountered.

Mr Nkosi responded to these two questions by stating that LGWSETA did not have to wait for the Minister. He stated that the information provided today was documented in March 2004 by the CEO and presented before the Board, which indicated that the LGWSETA would be receiving a negative report. A very definite strategy was identified to overcome each of the limitations. However the Minister's report covered the entire period of LGWSETA's existence, and stipulated that it had generally not met its objectives during that period. The strategy was submitted to the Minister but LGWSETA has not yet received a response. All LGWSETA has at the moment was a proposal to change the landscape of the various SETA's.

Mr Mshudulu asked LGWSETA to indicate the critical areas in its Annual Report that could be traced back to arrive at the source of the problems, and who would be held accountable for them.

Mr Nkosi replied that the document delivered to the Department identified certain areas in which the Department could assist the LGWSETA, such as serious understaffing in the skills development function. He stated that the Department should have made public the institutional capacity of the LGWSETA, so that the municipalities could be informed that it depended on them for funding.

Mr Mshudulu stated that the LGWSETA also highlighted the political will and accountability of municipal managers, and this must be focused on when this Committee interacts with the Department.

Mr Nkosi responded that LGWSETA accounts to the Department through quarterly monetary reports. This proved to be its downfall because there were matters that it did not include in such reports. LGWSETA also had to submit annual reports, which contained the business plans, and were presented to the executive committee and the board.

Mr P Smith (IFP) stated that the presentation indicated a semblance that matters were improving within LGWSETA. He sought clarity on the difference between the LGWSETA objectives and the National Skills Development Strategy (NSDS) objectives.

Mr Nkosi replied that the Minister set the NSDS objectives and required the SETA"s to comply, but it was possible to negotiate with the Minister in view of LGWSETA's current capacity constraints, which did not allow it to comply with all the objectives. Once agreement was reached on the LGWSETA objectives it would be signed as a Memorandum of Understanding (Memorandum of Understanding). Thus the NSDS objectives were national targets, whereas the LGWSETA could negotiate its own objectives in terms of its capacity constraints.

Mr Smith asked whether an impact study has been commissioned which ascertains how the customer viewed the service provided by LGWSETA.

Mr Nkosi replied that such a study has not been conducted, but it is something that LGWSETA believes needs to be done by the end of 2004. The intention was to host an indaba this year with all the training structures, to ascertain their functions, programmes and impact. This would provide a valuable basis on which LGWSETA could then assess the importance of the service it provides to its customers.

Mr Smith stated that he presumed that the LGWSETA had some mechanism in place to address all the weaknesses it had identified, and asked whether a clear turn around strategy has been identified for each of the weaknesses.

Mr Nkosi replied that provincial co-ordinating committees were established which consisted of the South African Local government Association (SALGA), two unions and the South African Water Utilities (SAWU). The business strategy document indicates how these would be being addressed, and some have already been addressed very vigorously by LGWSETA itself.

Nkosi M Nonkonyana (ANC) asked whether LGWSETA has any system in place to accommodate traditional institutions, and whether they were stakeholders in the local government partnership.

Mr Nkosi responded that a clear role for traditional leadership has not yet been identified. The LGWSETA provincial managers were mandated to ensure that the traditional leadership plays a very active part in ensuring that they assist in the decision-making process. They were also part of the provincial co-ordinating committees.

Nkosi Nonkonyana sought clarity on the percentage of the total levy contributed by the poorer communities, if the presentation indicated that 52% of the levies were contributed by the larger municipalities.

Mr Nkosi replied that the smaller municipalities do contribute, but the contribution should not be compared to that of the larger municipalities. They do not claim these funds back because it was not economically viable to do so, and LGWSETA instead assisted them in the form of discretionary funds for training programme in the small municipalities.

Nkosi Nonkonyana asked LGWSETA to indicate how the R79m allocated for the community development workers (CDW) would be distributed nationally.

Mr Nkosi responded that LGWSETA initially invested R4m off the bat to skill CDW's, as this programme was a matter of urgency. It was a programme that ran countrywide, and was unfortunately a multi-departmental project and had 'too many cooks'.

Nkosi Nonkonyana asked LGWSETA to indicate the Government Gazzette that contains the turnaround proposals.

Mr Nkosi responded that there was a period during which the Minister should recertificate the SETA's so that they operate in terms of a new license in 2005. The LGWSETA received the letter from the Minister and it responded by stating its proposed plans for the strategy, but the LGWSETA seemed to have been overtaken by events because the National Skills Authority (NSA) has already published a document proposing how the SETA's should be packaged for the next 5 years. The proposal was that one public service SETA be established which would bring the three spheres of government together, and this has been gazetted for public comment.

LGWSETA was of the view that this was not the best way to move forward because DPLG, with all its challenges and dynamics, would lose the momentum needed to assist LGWSETA. LGWSETA acknowledges under-performance, but government should comment on the plan it proposed. The public comments must be submitted by end of October 2004 and the Minister will pronounce on the new landscape by end of February 2005 during the NSA workship.

Mr Smith sought clarity on LGWSETA's relationship with the Department of Provincial and Local Government (DPLG), as opposed to the relationship it enjoyed with the Department of Labour. Furthermore, what kind of role should DPLG be playing in support of LGWSETA.

Mr Nkosi replied that LGWSETA was very concerned by the fact the DPLG was far too removed from the work done by LGWSETA, and discussions were being held with the Director-General to correct that.

The Chair stated that when she was involved in training programmes in the NGO sector she experienced frustration with the attendance and participation of people who were supposed to be receiving the training and how that person would be utilised after receiving the training. The second was the monitoring by the institution of the person who received the training. She asked LGWSETA to explain the measurement tools it has put in place to distinguish between the number of people trained and the quality of the training received and the impact of the training on their duties.

Secondly, the Chair asked LGWSETA to explain the extent to which its challenges have been shared with relevant stakeholders, including SALGA, the Department of Labour, DPLG and the Department of Water Affairs and Forestry.

Mr Nkosi responded that LGWSETA did share information with its stakeholders. These included SALGA, SAWU, the to unions, DPLG, the Department of Water Affairs and Forestry and the Department of Labour. On 8 and 9 September 2004 LGWSETA hosted an information sharing exercise on this matter with all its stakeholders, and it was accepted by them.

The Chair stated that it appeared that programmes were handed to municipalities to implement, rather than the programmes being introduced by municipalities themselves to address a certain need. She stated that she was left with the impression that LGWSETA was responding more to a perceived need of the municipalities rather than a felt need, and what could be done to change it to a felt need.

Mr Nkosi replied that the last thing LGWSETA would want to do was to design programmes based on its view of what the municipalities need, as they would not accept this. Instead it designed programmes based on what the municipalities themselves felt they needed, having looked at their service delivery strategies. LGWSETA thus works in conjunction with the municipalities in designing learnerships for municipalities.

Mr Mshudulu requested the number of the Government Gazette referred to.

Mr Nkosi responded that it was Notice 2172 of 2004.

Mr Mshudulu requested LGWSETA to provide information on the areas in which the CDW's were operating.

Mr Nkosi replied that there were major problems with the CDW's, and the Western Cape LGWSETA left on a fact-finding mission to Cuba to understand this concept. There are too many people driving this exercise, and a decision was taken that this responsibility would now lie in the office of the Premier. A report will be sent to Parliament by Friday on the exact status, location and functions of the CDW's in each area of all provinces.

The Chair thanked the LGWSETA for the interaction and stated that the Committee would have to follow-up on the challenges raised by LGWSETA.

Mr Nkosi questioned whether the learnerships for South Africans were not too expensive, because it would cost SETA's about R15 000 - R20 000 for an MBA. It was becoming more expensive each day and was thus becoming more exclusive. The most expensive factor was relying on external bodies to provide the training because the institution could not provide it itself, and he suggested that this training facilitation be made an in-house component in order to reduce costs and make training more accessible.

The Chair stated that this matter should be parked for the moment, and she will discuss ways of addressing this with Mr Nkosi.

Mr Deysel thanked the Committee for the crucial interaction, and looked forward to future interaction to address the concerns raised during the presentation.

Municipal Demarcation Board Presentation
Mr H Monare, Manager: Municipal Demarcation Board (MDB), conducted the presentation (document attached) which outlined the structure of the MDB Board, its vision, mandate and mission, its operational structure and staffing, programmes and projects undertaken, its strategic context 2004/5 and its financial results and issues.

Discussion
Mr Smith stated that this was the third occasion in which the problem with the DMB running out of funds before the end of the financial year was raised, yet it is nowhere nearer to being resolved. This was unacceptable. The MDB had two options: the first would be for it to continue normal functioning, run out of funds and close up shop at the end of November 2004. The second would be to tailor its work to fit in with its budgetary constraints, which meant that it would presumably be doing a poor job of what it should be doing. He suggested that the second option should be followed.

Mr Monare replied that the MDB was driven by legislation and the only way in which it could redesign its operations would be to start cutting some programmes from its operations, and to commit less than 100% to certain programmes. The concern then would be the impact that this would have on the boundary demarcation exercises. This might have to be done because the MDB was not allowed to overspend or take an overdraft.

From the very beginning the MDB has taken a very lean approach to its operations and only done those things which were absolutely necessary. If the MDB were now to redesign its operations it would not consult the public as much if at all, and would conduct all its work 'indoors'.

Mr Smith asked whether the MDB had devised a plan to conduct the hearings on the planned demarcation on the basis that it would not be receiving additional funds to do so.

Mr Monare responded in the affirmative.

Mr Smith stated that Parliament will be going into recess within a month, but it has not yet received a Bill on the cross-boundary municipalities (CBM). He asked the MDB to indicate the extent to which the failure to pass any such legislation during this year would affects its plans to phase in the new boundaries.

Mr Monare responded that the MDB has established with the Minister that whatever happens to the CBM would not affect the ward limitation process. The wards would thus remain in tact and the MDB can proceed with its work. He stated that the fact that the Bill was not passed had no impact on the functioning of the MDB, because the Minister indicated that the Bill would not cut through wards.

Mr Smith stated that the decision could either be take to abolish the CBM's and redesignate municipalities within the existing provincial boundary, or the existing municipal boundaries could be classified as the correct boundaries and the provincial boundaries could be redesignated accordingly. The presentation did not clearly state which of these options was recommended by the Minister.

Mr Monare replied that all the options suggested by the MDB revolved around the moving of the provincial boundaries in various ways.

Mr Smith asked whether a list of the current non-viable municipalities was available, and asked whether they would be redemarcated for the upcoming election.

Mr Monare responded that the non-viable municipalities would not be redemarcated before the upcoming election, and would only happen with effect from the next local government elections, if at all. He stated that he did not have the list with him, but it could be made available.

Mr Smith questioned the decision not to disestablish the non-viable municipalities if they were in fact non-viable.

Mr Monare responded that, as indicated in his presentation, there were a number of other factors that were taken into account in making the decision. The decision to declare then non-viable should then be used as a source document to give them a chance over the next few years to capacitate themselves. The Municipal Infrastructure Grant (MIG) could even assist them, as well as the provincial municipalities. The system needs more time to mature and must be given the chance.

The Chair requested the MDB to furnish Members with information on the list of non-viable municipalities as well as the areas of incompetence which resulted in the non-viability.

Mr Monare replied that this list and the areas of incompetence would be made available to Members.

Mr Smith asked whether the MDB was on track to hand over the demarcation to the Independent Electoral Commission (IEC) in April 2005.

Mr Monare replied that April 2005 was still targeted as a hand over date, and the MDB had to redesign its operations to meet this deadline

Nkosi Nonkonyana asked whether the traditional authority boundaries have been accommodated in the DMB's demarcation process.

Mr Monare responded that the MDB's emphasis was largely on district council and municipal level. It did accommodate traditional authorities to the extent that it did not split their areas, but the MDB has not ensured that they were contained within district councils. This was done as part of the MDB's consultation process.

Nkosi Nonkonyana asked whether the DMB was still using consultants to deal with the ongoing technical corrections.

Mr Monare replied that it was not strictly a consultant problem. The technical corrections process merely referred to the decision that what was contained on paper should match exactly what took place on the ground.

Nkosi Nonkonyana stated that the issue here was whether the consultants were absorbing much of the MDB's budget. The report indicates that R5,9m was spent in this year on professional fees, and asked whether this included consultants. Furthermore, the report indicated a jump in staff salaries from R4,7m in 2003 to R5,1m this year. This appeared to militate against the MDB's request for additional funds, as it was spending more each year on staff salaries, office equipment and, it is assumed, consultants as well under professional fees.

Ms L Mashiane (ANC) asked whether it was not possible to scale down on the fees used for consultants, such as employing volunteers or unemployed persons.

Mr Monare responded to these two questions by stating that professional fees did include consultants, and stated that many consultants were used nationwide especially in conducting the capacity assessments. In this process the MDB has consciously taken on many young, up and coming graduates to conduct this exercise. It would not consult the 'big 5 well known consultants'.

The staff salary allocation needed to be increased to R5,1m for this year in order to prepare itself for its work. This applied to a few strategic positions, especially the Geographical Information System (GIS) unit. The MDB consisted of a small number of employees, and their salaries compared with salaries of equivalent ranks in the civil service. The CEO held the equivalent rank of a Chief Director, and thus the salaries were not excessive or exorbitant.

Ms Mashiane sought clarity on the exact nature of the work provided by the consultants.

Mr Monare replied that they were sent out to municipalities to augment the MDB's humanpower component, especially its GIS capacity. They did not conduct unnecessary work, but were used for a specific purpose.

The Chair asked the MDB to explain what was meant by office expenses, as indicated in its report.

Mr Monare replied that the Board operates at a high level and produces many reports and maps. It does not own its premises but rents the building and uses a significant amount of advanced machinery. It also sent out piles of maps to its stakeholders and upon request. The MDB cannot thus be a minimalist organisation unless it compromises the quality of the service it provides to the people.

Nkosi Nonkonyana stated that the presentation did not include maps on the Eastern Cape demarcation maps.

Mr Monare responded that the MDB has indicated that there were some delays with Ward 2, and the release of the maps for Kwazulu-Natal and the Eastern Cape would take place during this week.

Mr I Mfundisi (UCDP) asked whether there was a specific reason why not all 9 provinces were represented on the MDB Board.

Mr Monare replied that he did not know how the board was constituted. The Board did not however operate on a provincial basis but was instead a national board.

Mr Mfundisi sought clarity on which District Management Areas (DMA) would be done away with.

Mr Monare responded that national parks such as the Kruger Park would remain, so national heritage sites such as the Cradle of Humankind and St Lucia Wetlands. All the others such as the deserts would have to go.

The Chair stated that a conference on local government elections was organised by DPLG and resolutions were taken . She asked whether those resolutions have been incorporated into the work done by the MDB.

Mr Monare replied that many matters raised at the conference related to consultation issues, flexibility in dealing with ward limitation. The MDB committed to taking these into account, but it was bound by certain factors, such as it cannot vary from the norm by more than 15%.

The Chair stated that SALGA recently hosted a conference and sought clarity as to the extent to which the resolutions taken at the conference impacted on the work done by the MDB, especially in ensuring co-ordination between the structures.

Mr Monare responded that the MDB was incorporating the resolutions taken at the conference, and they will be tabled with the MDB board.

Ms Mashiane asked the MDB to explain the steps it has taken to correct the concerns and emphases of matter raised in the Auditor-General's report on the MDB. It would be difficult for this Committee to motivate for more funds for the MDB if these concerns were not first addressed.

Mr Monare replied that there have been pockets of internal inefficiency in dealing with administrative issues, and it was for this reason that Mr R Somanje has been appointed as the CFO. The former head of finance was dismissed for a variety of reasons, including inefficiency. The MDN is much more tightly knit now that it used to be, and all efforts were made to ensure that it would always be in a position to account for all its funds. The emphases of matter raised by the Auditor General were aimed at ensuring that the MDB tightened the screws at institutional level. He assured Members that the MDB had these under control and it has dealt with all its issues of compliance, and was running very smoothly. The MDB had proof of this.

Mr Mshudulu sought clarity on the extent to which the MDB has aligned DPLG's boundaries with the constitutional boundaries.

Mr Monare responded that these service delivery boundaries were almost complete and the issues were now being transferred to DPLG itself to conclude its role in the process, as the MDB's role was solely to finalise the alignment.

The Chair asked Mr Monate to indicate how often the Board met.

Mr Monare replied that the full Board met once every 2 months and in between there were meetings of the various committees, such as the executive committee, the boundaries committee, the powers and functions committee and the audit committee.

The Chair requested a breakdown of the office expenses and Board member's salaries, if they only met once every 2 months and the salaries budget stands at R1,4m.

Nkosi Nonkonyana stated that the amortisation allocation of R204 000 included computer software, yet the MDB presentation stipulated that computer software was included in professional fees.

Secondly, Nkosi Nonkonyana stated that the statement made by the Auditor-General in the MDB's Annual Report that "the MDB does not have an effective system of monitoring its expenditure against the allocated budget, resulting in overspending on certain items" was a cause of concern and must be addressed.

The Chair stated that this matter must be closed by noting the Committee's reservations regarding the MDB's financial statements, which Members will still consider thoroughly. The Committee must first satisfy itself that the MDB had proper financial management structures in place before it could motivate for further funds to be granted to the MDB.

Mr Monare responded to these questions by stating that he would get back to Members shortly with a full breakdown of the expenses.

National House of Traditional Leaders Presentation
Nkosi Mpiyezintombi Boy Mzimela, Chairperson of the National House of Traditional Leaders (NHTL) stated that the invitation from the Committee was received at a short notice, and it was in fact not clear as to what exactly the NHTL would have to present to the Committee as it has already tabled its Annual Report to Parliament. He stated that he would then outlined briefly the key challenges facing the NHTL.

The first major problem was that the NHTL only met with the Committee when it needed to present its Annual Report. The NHTL has suggested in the past that it would benefit greatly from constant interaction with this Committee, especially on political and administrative matters. The NHTL thus faced the same problems as before and the Committee has not yet come forward to interact with the NHTL in order to address these problems.

The first challenge was that, since its inception in 1997, the NHTL continues to operate without its own chamber. The chamber could be located either within the Parliamentary premises or nearby. Only the Chairperson and his deputy functioned on a full time basis, yet even their duties were not clear. The NHTL was busy drawing up a clear programme of action which should be finalised by the end of the month, and it was being assisted by the DPLG and the advisor to the Minister. It was also in the process of requesting a larger budget from National Treasury, because it was currently operating on a minimal budget.

Secondly, the NHTL struggles to deal with the financial report because this was dealt with by the Department as the NHTL was currently not in control of its own budget. The NHTL put forward a proposal to Treasury for its very own organogram, yet no support was offered by this Committee in this regard. The NHTL cannot function properly without this structure and its physical facilities.

Kgosi Simane Victor Suping, Member of the NHTL Management Committee, echoed Nkosi Mazimela's call for a chamber for the NHTL.

Prince Z Makaula, Member of the NHTL Management Committee, stated that the NHTL was never intended to be an appendage of any government department, and thus needed its autonomy, not merely independence.

Discussion
The Chair apologised to the NHTL for the late start to the meeting, and explained that the NHTL was asked to address the Committee today because it had presented its Annual Report to a Committee of the Second Parliament whereas this was now the Third Parliament.

Mr Smith asked whether the NHTL has received any response from government with regard to its problems.

Mr Smith asked the NHTL to indicate the kind of budget it would require to enable it to properly perform its functions.

Nkosi Nonkonyana stated that there was absolute necessity to interact with the NHTL today to discuss the challenges it faced.

Secondly, Nkosi Nonkonyana stated that the NHTL should establish its own Parliamentary office.

Nkosi Mzimela responded that all such options were possible.

Nkosi Nonkonyana sought clarity on the relationship between the NHTL and MDB.

Nkosi Mzimela replied that no such relationship existed and no interaction has ever taken place. He stated that he hoped that today would mark a turn around.

Ms Mashiane asked the NHTL to indicate whether it was ready to comply with the Public Finance Management Act (PFMA).

The Chair replied that the NHTL cannot answer this question until its financial independence and affairs have been resolved.

The meeting was adjourned.