Presentation to Standing Committee on Appropriations on the readiness to

administer grants allocations for the 2014/15 Financial Year

07 March 2014

DIRECTOR- GENERAL: T. ZULU

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1. Overview of the MTSF2.HSDG 2014 MTEF Allocations3.Readiness of Provinces to implement 2014 MTEF grant allocations4.Progress on the devolution of housing function and municipal accreditation5.Alignment & Coordination of the upgrade of sanitation including the revisions of HSDG6.Efforts at improving spending performance in the roll-out of human settlements7.Conclusion

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PRESENTATION OUTLINE

MTSF OVERVIEW

• Outcome: Sustainable Human Settlements and Improved Quality of Household Life

• Sub outcomes:– Adequate housing and improved quality living

environments– A functionally equitable residential property

market – Enhanced Institutional capability for effective

coordination of spatial investment decisions

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From Housing toHuman Settlements

• Creation of Sustainable & Whole Settlements, that provide:– Safe & secure environments;– Access to economic opportunities;– Mix of housing & tenure options;– Reliable basic services;– Reliable public amenities:

• Education, health, recreation, etc.

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National Development Plan

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Rethink: Human SettlementsRethink: Human Settlements

Proximity to Public Services Proximity to Public Services & Amenities& Amenities

Increased Densities & Increased Densities & ThresholdsThresholds

Spatial Integration & EfficienciesSpatial Integration & Efficiencies

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Pres. Infra. Co-ord. Comm.SIP 7

• Ensure better integration between human settlements planning, public transport infrastructure, & bulk infrastructure provision.

• Strategic objective begin to transform racial apartheid geography, & address economic dysfunctional challenges of urban sprawl.

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Key Priorities

• In giving traction to accelerated human settlements delivery, the following, among others, will be prioritised:– Informal Settlements Upgrading– Sanitation & Bucket Eradication– Mining Towns– Affordable Rental & PHP– Military Veterans– Affordable Housing Finance

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From Outputs to Outcomes

• For the coming term, a shift in emphasis:– Reflect on more than mere outputs and delivery numbers

as has previously been the case, but also reflect on the outcomes and implications of the said delivery.

– Thus aspects such as density, informality, sprawl, access & efficiency to become integral to human settlement vocabulary.

– To this end, particular emphasis to be placed on better integration of human settlement delivery with that of bulk infrastructure. This is inclusive of public amenities and goods;

– In order to better address economic and social challenges of especially urban spaces.

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Readiness of Provinces to Implement 2014 MTEF Grant Allocations

• Towards disbursement of HSDG Allocations to Provinces:– Provinces currently in the process of completing

2014/15 Business Plans.– Due on 07 March 2014– Approval of 9 Provincial Plans and National HSDG

Business Plan by 31 March 2014.• Department, therefore, stands ready to present

detailed Plans by mid-April 2014.

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HSDG 2014 MTEF allocations

Provinces 2014/15 2015/16 2016/17

R`000

Total Allocation by province

Total Allocation by province

Total Allocation by province

EASTERN CAPE 2 159 218 1 929 157 2 147 265 FREE STATE 1 061 756 1 131 794 1 252 868 GAUTENG 4 417 641 5 065 766 5 631 437 KWAZULU-NATAL 3 273 045 3 313 983 3 547 298 LIMPOPO 1 219 115 1 201 733 1 329 147 MPUMALANGA 1 146 690 1 316 401 1 450 045 NORTHERN CAPE 374 832 376 006 416 487 NORTH WEST 1 517 136 2 153 545 2 363 612 WESTERN CAPE 1 914 935 2 044 191 2 271 408

Total 17 084 369 18 532 576 20 409 567

Human Settlements Development GrantAllocation according to updated formula

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Allocations with Priorities

R'000

EASTERN CAPE 2 159 218 - 2 159 218 1 929 157 - 1 929 157 2 147 265 2 147 265

FREE STATE 1 029 781 31 975 - 1 061 756 1 017 160 114 634 - 1 131 794 1 132 158 120 710 1 252 868

GAUTENG 4 384 873 32 768 - 4 417 641 4 948 286 117 480 - 5 065 766 5 507 731 123 706 5 631 437

KWAZULU-NATAL 3 105 952 167 093 3 273 045 3 186 983 127 000 3 313 983 3 547 298 3 547 298

LIMPOPO 1 195 875 17 540 5 700 1 219 115 1 134 649 62 884 4 200 1 201 733 1 262 930 66 217 1 329 147

MPUMALANGA 1 096 218 43 123 7 349 1 146 690 1 156 497 154 604 5 300 1 316 401 1 287 248 162 797 1 450 045

NORTHERN CAPE 365 406 9 426 - 374 832 342 215 33 791 - 376 006 380 905 35 582 416 487

NORTH WEST 1 361 968 155 168 - 1 517 136 1 597 238 556 307 - 2 153 545 1 777 820 585 792 2 363 612

WESTERN CAPE 1 910 077 4 858 1 914 935 2 040 691 3 500 2 044 191 2 271 408 2 271 408

Total 16 609 369 290 000 185 000 17 084 369 17 352 876 1 039 700 140 000 18 532 576 19 314 763 1 094 804 - 20 409 567

Mining Towns

Disaster Relief

Normal Project

AllocationMining Towns

Disaster Relief

Total Allocation

Normal Project

AllocationTotal

Allocation

2014/15 2015/16 2016/17

ProvincesMining Towns

Disaster Relief

Total Allocation

Normal Project

Allocation

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Decisions taken to eradicate Buckets systems

• A decision was taken at several meetings of Ministers of Human Settlements, COGTA and Water Affairs to eradicate buckets system

• The decision was also been ratified by the Presidential Coordinating Council that took place on 17 October 2013

• The Bucket Eradication Programme (BEP) is currently not funded

• Discussions were held with National Treasury regarding funding on this programme

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Decisions taken to eradicate Buckets systems Continues

• A decision has been taken to top slice 5% of the HSDG to fund this programme

• A new grant (Schedule 6A) has been gazetted• Funds have been divided among provinces in

proportion to the number of households that reported using buckets

• This grant is allocated for two years and will end in 2015/16

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Impact of bucket eradication on total allocation

R'000

EASTERN CAPE 2 159 218 - 116 893 2 276 111 1 929 157 - 108 437 2 037 595

FREE STATE 1 029 781 31 975 - 55 749 1 117 505 1 017 160 114 634 - 57 174 1 188 968

GAUTENG 4 384 873 32 768 - 237 383 4 655 024 4 948 286 117 480 - 278 141 5 343 907

KWAZULU-NATAL 3 105 952 167 093 168 146 3 441 191 3 186 983 127 000 179 139 3 493 122

LIMPOPO 1 195 875 17 540 5 700 64 741 1 283 855 1 134 649 62 884 4 200 63 778 1 265 511

MPUMALANGA 1 096 218 43 123 7 349 59 346 1 206 036 1 156 497 154 604 5 300 65 006 1 381 407

NORTHERN CAPE 365 406 9 426 - 19 782 394 614 342 215 33 791 - 19 236 395 242

NORTH WEST 1 361 968 155 168 - 73 733 1 590 869 1 597 238 556 307 - 89 780 2 243 326

WESTERN CAPE 1 910 077 4 858 103 405 2 018 341 2 040 691 3 500 114 707 2 158 898

Total 16 609 369 290 000 185 000 899 177 17 983 546 17 352 876 1 039 700 140 000 975 399 19 507 975

Bucket Eradication

Bucket Eradication

Normal Project

AllocationMining Towns

Disaster Relief

Total Allocation

Normal Project

Allocation

2014/15 2015/16

ProvincesMining Towns

Disaster Relief

Total Allocation

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Effects of 5% Top Slicing on normal projects

Province

R'000Original

AllocationRevised

Allocation EffectOriginal

AllocationRevised

Allocation Effect

EASTERN CAPE 2 276 111 2 159 218 116 893 2 037 595 1 929 157 108 437

FREE STATE 1 085 530 1 029 781 55 749 1 074 334 1 017 160 57 174

GAUTENG 4 622 256 4 384 873 237 383 5 226 427 4 948 286 278 141

KWAZULU-NATAL 3 274 098 3 105 952 168 146 3 366 122 3 186 983 179 139

LIMPOPO 1 260 615 1 195 875 64 741 1 198 427 1 134 649 63 778

MPUMALANGA 1 155 564 1 096 218 59 346 1 221 503 1 156 497 65 006

NORTHERN CAPE 385 188 365 406 19 782 361 451 342 215 19 236

NORTH WEST 1 435 701 1 361 968 73 733 1 687 019 1 597 238 89 780

WESTERN CAPE 2 013 483 1 910 077 103 405 2 155 398 2 040 691 114 707

TOTAL 17 508 546 16 609 369 899 177 18 328 275 17 352 876 975 399

2014/15 2015/16

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Alignment & Co ordination of the Upgrade of Sanitation Infrastructure

• Planning: The Department is actively involved at the planning stages of municipal infrastructure provision through the IDP/ Water Services Development Plan processes

• Assessment of Technical Reports: Municipal Technical Reports for sanitation are assessed and recommended for MIG funding by the Department

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Alignment & Co ordination of the Upgrade of Sanitation Infrastructure

• In the Bucket Eradication Programme, the Department ensures that Regional Bulk Infrastructure Grant (RBIG) and the Municipal Infrastructure Grant (MIG) fund the bulk infrastructure while the HSDG funds connector and reticulation services to eradicate bucket sanitation.

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Coordination

• The three Ministries of Water Affairs, Cooperative Governance and Human Settlements have formed a partnership to coordinate and accelerate delivery of basic water services. ( Political and Technical Troika meetings take place at least twice a month)

• The above three Ministries and Provincial Premiers have signed MoUs to formalize the partnerships

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Improvement of Spending

• To improve spending, the Department has established a Professional Response Team (PRT) that will be deployed to provinces and municipalities to identify service delivery challenges and propose solutions in order to improve the rate of delivery of services.

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2014/15 Indirect HSDG Allocation

Number % of total Number % of totalEastern Cape 43,550 15.95% 143,442,754.87R 16%Free State 101,810 37.29% 335,336,552.78R 37%Gauteng 30,031 11.00% 98,914,566.51R 11%KwaZulu-Natal 10,956 4.01% 36,086,310.50R 4%Limpopo 562 0.21% 1,851,086.76R 0.2%Mpumalanga 4,205 1.54% 13,850,213.19R 2%North West 38,041 13.93% 125,297,493.41R 14%Northern Cape 11,764 4.31% 38,747,659.43R 4%Western Cape 32,076 11.75% 105,650,282.55R 12%TOTAL 272,995 100% 899,176,920.00R 100%

Province

2014/15 AllocationBucket backlog

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PROGRESS ON ASSIGNMENT– Significant progress has been made in ensuring the

readiness of the six metros for the formal transfer of the housing function by 2014.

– Council Resolutions to support assignment were issued by the Metropolitan Municipalities.

– Metros have redesigned the organisational structures to accommodate the new functions.

– Joint provincial and metro assignment task teams are fully established to negotiate the transitional and transfers arrangements and manage the associated risks.

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PROCESS FOR ASSIGNMENT

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PROGRAM OF ACTION

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PROGRESS ACCREDITATION

• To date there are 27 municipalities accredited at level 1 & 2. • This includes the six metros earmarked for assignment

namely: • City of Cape Town,• Ethekwini Metro, • Ekurhuleni Metro, • City of Jo’burg, • Tshwane Metro, and • Nelson Mandela Bay Metro.

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FINANCIAL IMPLICATIONS

• The estimated Human Settlements Development Grant allocations to the six metros is about R21.7 billion over the 2014 MTEF Period.

• The assignment of functions implies that the above capital grant allocations will flow directly to the 6 Metros.

• The HSDG funds will only flow in 2015/16 financial year.

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Funds from the HSDG going to MetrosProvinces Metros 2014/15 2015/16 2016/17EASTERN CAPE Nelson Mandela 347,982 310,905 346,056.00

Sub Total 347,982 310,905 346,056

GAUTENG Ekurhuleni 1,265,360 1,427,947 1,589,388 Jo'burg 1,504,139 1,697,406 1,889,311 Tshwane 970,365 1,095,047 1,218,851

Sub Total 3,739,864 4,220,399 4,697,551

KWAZULU-NATALeThekwini 1,150,459 1,180,473 1,313,935

WESTERN CAPE Cape Town 1,350,467 1,442,814 1,605,936

Grant Total 6,588,772 7,154,591 7,963,478

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FINANCIAL IMPLICATIONS ..Cont

• The National Treasury has made available a budget of R 900 million over 2014 MTEF Period for operational capacitation of the 6 (six) metros.

• The 2013 Division of Revenue Act has prepared the provinces and metros for the change in funding flows to support assignment.

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2014 MTEF Allocations: Municipal Human Settlements Capacity Grant

2014/15 2015/16 2016/17

Nelson Mandela 37 707 37 707 37 707

Ekurhuleni 52 374 52 374 52 374

Jo'burg 59 573 59 573 59 573

Tshwane 47 506 47 506 47 506

eThekwini 52 469 52 469 52 469

Cape Town 50 370 50 370 50 370

TOTAL 300 000 300 000 300 000

Municipality R'000

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READINESS

• Capacity building on Business Plans for :– Operational/ Capacitation Grant – Human Settlement Grant

• Training on Human Subsidy System (HSS) & Needs Register systems

• Toolkit with Business Processes , Housing Policies , Housing value Chain and Housing Sector Plan is underway.

• Provinces have been capacitating Metros on reconciliation and redemption Processes

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READINESS (Cont…)

• The Metros and Provinces are expected to finalize their negotiations on transitional arrangements for the transfer of projects, staff, assets and liabilities using the two phased approach.

• A due date of March 2014 has been set for the signing of executive assignment agreements and May 2014 has been set as a due date for Premiers to issue the Proclamations.

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Efforts to improve spending performance

• Capacity Building on projects readiness matrix• Practice notes for procurement to start as early as

November every financial year• Devolving Housing function to Metros• Use of HSS by Provinces to record all the projects• Quarterly performance reviews and visits

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ADDITIONAL MEASURES TO IMPROVE ALIGNMENT AND COORDINATION

PROFESSIONAL RESOURCE TEAMS (PRT)• What are PRT’ – this are multidisciplinary teams of professionals in the

built environment• Key assignment – to provide assistance with regards to development,

reviewing and packaging of innovative approaches to meeting identified human settlements needs across the country, influencing planning, provision and development of sustainable human settlements opportunities in line with Government policy and strategies. And also assist the department with planning and implementation support to the Provincial and Municipal Human Settlements.

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ADDITIONAL MEASURES TO IMPROVE ALIGNMENT AND COORDINATION (Cont…PROGRAMME AND PROJECT MANAGEMENT

SYSTEM (PPMS)• Why the PPMS – to effectively and efficiently monitor projects of the

entire Human Settlements sector in SA, by tracking and reporting on the various activities and programmes contributing towards successful implementation and achievement of the mandate.

• What is it all about: implementation of standardized PPMS and methodology for all Provincial and Municipal Human Settlements departments

• Key benefits: improve planning and multi-year projects, cash flow estimates and alignment, more accountability, enhanced performance, better governance and transparency and quality reporting.

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THANK YOU

“We have come a long way – Celebrating 20 Years of Freedom!”

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