Annual Report: Vote 5

2004/ 2005

Presentation to the Portfolio Committee on Provincial & Local Governmentby Ms Lindiwe Msengana-Ndlela

Director-General: dplgTuesday, 13 September 2005

ContentsA. Overview

•Financial Performance and Highlights

•Programme Performance

•Outlook

•Project Consolidate

B. Structure of the Annual Report

•Programmes

C. Conclusion and Way Forward

•Our commitment to Parliament for 2004/05

•Key Performance Areas for Local Government

•Collective Action

2

A. Overview

3

Financial Performance

61 375

2 495 422

6 860 172

46 967658 311

2 483 381

6 849 332

3,755 4,737 26%

6,580 39%

9,466 44%

13,137 39%

2,000

4,000

6,000

8,000

10,000

12,000

14,000

(R'b

illio

n)

2000/01 2001/02 2002/03 2003/04 2004/05

dplg - Allocation Trends

Budget % year on year increase

4

Financial Performance and Highlights

• Departmental budget under review: R13.1b.

• Increase of 38,8% from R9.4 billion allocated in previous financial year.

• Unqualified Audit opinion from the Auditor-General.

5

Financial Performance and Highlights …

6

• R7,7 billion transferred directly to municipalities for basic services;

• R4,5 billion for municipal infrastructure and job creation;

• R130 million for drought relief in South Africa and R20 million for financial needs related to the East Asian (Tsunami) Disaster;

Financial Performance and Highlights …

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• A total of R17,3 million to the South African Local Government Association, and R22,5 million to the Municipal Demarcation Board to prepare for the next Local Government Elections;

• A total of R8,6 million to the National House of Traditional Leaders, R4 million to the Commission on Traditional Leadership Disputes and Claims and R9,7 million to the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities; and

• R224 million for the dplg operational budget.

FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER

April, 2004 March, 2005

Ap

ril

Au

gu

st

No

vem

ber

Jan

uar

y

Funding

Injection of R12.8b (plus R0.29b in October 2004) for basic service delivery development and co-ordination directed towards Provincial Municipalities

Focus on Gender

2nd Women in Local Government Conference

IGR and Traditional Leadership

• Intergovernmental Relations Framework Bill by Cabinet and introduction to Parliament

• Establishment of the Commission on Traditional Leadership Disputes and Claims

Disaster Management

• Domestic: Cabinet’s approval of R20m for financial needs related to the East Asian Tsunami and R130m for drought relief in South Africa

• International: Government’s support programme together with other stakeholder to assist (financially and in-kind) in the aftermath of the Tsunami Disaster in South East Asia as well as in affected African countries

Jun

e

July

Dec

emb

er

Mar

ch

Public Participation and Empowerment

National Conference on Community Participation and sharing of best practice

Free Basic Services

Completed the development of Monitoring System and a Portal to support municipalities in implementing the FBS Policy

Recognizing Excellence

Second National Municipal Performance Excellence (VUNA) Awards held successfully

Launch of PROJECT

CONSOLIDATE

A Hands-on Local Government Support and Engagement Programme

Oct

ob

er

Sep

tem

ber

Local Government

Elections

Preparatory Conference

Snapshot of the 2004/05 Financial Year

8

Outlook

• Key milestones from recent past

• The year 2004 in South Africa

9

Project Consolidate

1.1 Since April 2005:

a) Service Delivery Facilitators (SDFs) have been mobilised and deployed to municipalities.

b) Through the Presidential and Ministerial Municipal Izimbizo Programme, we have directly engaged with more than 40 municipalities.

c) We are Monitoring and Evaluating progress through a systematic framework of Performance Areas and Indicators.

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KPA 1: Service Delivery and Infrastructure• Water services• Electricity• Solid waste management• Environmental management• Roads• Housing (metros only)• Urban efficiency and Spatial planning

(metros only)• Community facilities

KPA 2: Local Economic Development• Economic growth• Poverty alleviation• Job creation

KPA 3: Municipal Financial Viability• Financial viability• Grant expenditure and management

KPA 4: Municipal Transformation and Institutional Development

• Organizational design• Employment equity• Skills development• Integrated development planning• Performance management system

KPA 5: Good Governance• Public participation, accountability and

transparency• District governance (For district only)• Ward system• Corporate governance

Project Consolidate: Measure of Success at Municipal Level

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Project Consolidate …

1.2 Expected Outcomes:

a) Improved capacity of provinces and municipalities to deliver on their mandate;

b) Accelerated delivery of quality services to communities;

c) Empowered participating communities in the governance structures and processes; and

d) 136 municipalities will emerge out of Project Consolidate and graduate through to the sustainability phase in terms of Local Government Transformation process.

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B. Structure of Annual Report

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Vote 5 - Programmes• Programme 1: Administration p17~23

- Human Resource Management and Development (Increase from 264 to 342 staff members - 78, representing a 30%

increase)

- Internal Audit and Risk Management

- Compliance and Legal Services

- Corporate Planning and Project Management

- Communications

- Information Technology and Management

- Corporate Secretariat

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• Prog 2: Governance, Policy & Research p 24~28

- Intergovernmental Relations Framework Bill, now an Act

- Commission on Traditional Leadership Disputes and Claims

- Draft Policy on Municipal International Relations

- LED Strategy and implementation framework

Provincial Support

• Harmonisation of IDPs, PGDSs and NSDP

• Provincial Bills on national framework legislation on the institution of traditional leadership.

• Draft legislation on Provincial and Municipal International Relations.

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• Prog 3: Urban and Rural Development

p 29~35

- ISRDP/URP Financing Protocol

- Cluster interventions in Nodes

- Monitoring and Evaluation

16

• Prog 4: Systems and Capacity Building

p 36~41

- Implementation of the Disaster Management Framework

- Guidelines and framework for implementation of Property Rates Act

- Performance Management

- Preparations for Local Government Elections

17

• Prog 5: Free Basic Services & Infrastructure p 42~45

- Roll-out of Free Basic Services

- Municipal Services Partnerships guidelines

- Public Participation and Empowerment

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• Prog 6: Provincial and Local Government Transfers p 46~47

Provincial Transfers

- Local Government Capacity Building

- Municipal Infrastructure Grant

Local Government Transfers

- Equitable Share

- Municipal Systems Improvement Programme

- Municipal Infrastructure Grant

- Disaster Relief

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• Prog 7: Fiscal Transfers p 48~52

Funds made available to public authorities and other institutions in terms of the agreements between government and the

individual authority or institution.

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Report of Audit Committee (p 55)

• The Effectiveness of Internal Controls 56

• Internal Audit Function 56

• Quality of Management and monthly / quarterly reports submitted in terms of the PFMA and the Division of Revenue Act (DoRA) 57

• Evaluation of Financial Statements 57

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(A/R Page)

Other details of financial results

• Report of the Accounting Officer 59

• Statement of Accounting policies and related matters65

• Report of the Auditor-General74

• Annual Financial Statements78

(A/R Page)

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Annexures (p 106 ~ 190)

For example:

• Grants paid to Provinces & Municipalities

• Transfers to Departmental Agencies and Accounts

• Explanatory Notes in respect of Conditional Grants in terms of Section 18(1) of the Division of Revenue Act, 2004 (Act No. 5 of 2004)

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Annexures (p 191 ~ 215)

• Human Resources Oversite Report

• Legislation administered by the dplg

• List of departmental publications

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C. Way Forward

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Conclusion and Way ForwardOur commitments to Parliament for 2004/5:

We said that we will pay priority attention to:

Leading and facilitating policy coherence on matters of provincial and local government

Intergovernmental Relations Bill passed

Alignment of NSDP, PGDG’s and IDP’s

Big ideas emanating from the IDP Hearings

Shared Sustainable Development Paradigm

Government’s Connectivity with Communities

Impact of Intergovernmental Investment in Localities

Provincial Development and Strategic Role

Improving the Credibility of IDPs

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Conclusion and Way Forward…

Raising awareness and recognition of the depth of capacity challenges

Launch of Project Consolidate in October 2004

Follow a systematic approach to addressing critical capacity challenges arising from decades of neglect, poverty and

underdevelopment in poor and rural municipalities

Note our approach in addressing the 5 Key Performance Areas (KPA’s) for Municipalities

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KPA 1: Municipal Transformation and Institutional Development

i. Stabilize administrative and political components within municipalities

ii. Implement a systematic programme of capacity building Municipal managers

Senior Managers (Section 57 of the Systems Act)

Professionals• Chief Finance Officers

• Engineers, IT Specialists, Legal expertise

Artisans

All other staff levels• Front desk, Back Office – Systems and ‘Back to Basics” (Batho Pele)

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KPA 1: Municipal Transformation and Institutional Development …

iii. Strengthen the Performance Management System

Implementation of organisation-wide performance management systems in the municipalities

Individuals and the whole Municipal Institution

Particular focus on PA’s of Municipal Managers

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KPA 1: Municipal Transformation and Institutional Development …

iv. Intensify hands-on support, short-to-medium term

Apply (immediately) the hands-on model of Project Consolidate that includes SDFs, Professionals, National and Provincial Government, Private Sector, SOEs.

Senior Managers in National and Provincial Departments to spend at least 5 days at the coalface during a performance cycle under Project Consolidate. National and Provincial Departments must re-orientate staff and where appropriate, restructure to provide support at local level whilst maintaining their policy development and M&E mandate.

Complete a Service Delivery Agency model that strengthens the role of the District Municipality working together with better resourced municipalities to support smaller municipalities.

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KPA 1: Municipal Transformation and Institutional

Development … Implement staff recruitment and retention programme for local

Government.

Focus on the Leadership development of new Councillors and Municipal Managers.

Apply Intergovernmental Relations Act and report on its impact to Parliament.

v. Long-term sustainability

Integrating the ideal of the developmental state, developmental local government and participatory democracy within the governance system as a whole.

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KPA2:Municipal Financial Viability and Management

Improve municipal capacity in the following areas:

i. Long range Financial Planning and Budgeting

Cost and Management Accounting

Investment in social and economic infrastructure

Balanced rational and proportional spending on Capital Expenditure vs Operational Expenditure vs Salaries.

ii. Revenue and Debt Management

Targeted support to municipal treasury departments.

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KPA2:Municipal Financial Viability and Management …

iii. Financial controls, implementation of MFMA and Regulations

Improve capacity as indicated in KPA 1 recommendations

Accelerate anti-corruption programme.

iv. Financial Reporting

Note importance of this component with regard to quality decision-making processes.

Auditing

• Internal: improve capacity and proactive action prior financial year end

• External: Follow up on matters raised by the Auditor-General.

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KPA3:Basic Service Delivery and Infrastructure

i. Visible and demonstratable roll-out of basic services: Instill an organisational-wide sense of urgency whilst focusing on systematic and sustainable improvement of capacity over the long-term.

ii. Monitor implementation, particularly in areas highlighted in the IDP Hearing Report [particularly:

• sanitation, water, housing (including the deeds),

• electricity,

• waste management; and

• environmental impact management, land and agriculture, roads and public works.

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KPA 4: Local Economic Development

• Note outcomes of IDP Hearings and ISRDP/URP audit, with regard to

Local Economic Development

• Mandate the Economic and Employment Clusters, both at National and Provincial levels to accelerate the implementation of Local Economic Development strategies.

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KPA 5: Good Governance

i. Deepen community participation and empowerment.

ii. Improve the functionality of Ward Committees and roll-out of the Community Development Workers Programme in this context

iii. All three spheres to provide the necessary support to ensure effectiveness of Ward Committees and Good Governance

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Collective Action

Invaluable contribution and dedication towards the dplg in achieving its strategic objectives during the

2004/05 financial year.

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Thank you!

General Enquiries: Ms Jeanny Morulane,Senior Manager: Communication

Department of Provincial and Local Government,Private Bag X804, Pretoria, 0001,

South Africa

Tel: (012) 334-0631 / Fax: (012) 334-0852

Email: jeannym@dplg.gov.za / Web: http://www.dplg.gov.za

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