Deputy Minister Andries Nel: Debate on NCOP Provincial Week Report

Address by Mr Andries Nel, MP, Deputy Minister of Co-operative Governance and Traditional Affairs during a debate on the Provincial Week Report (21-24 July 2015): "Advancing the developmental agenda of municipalities for our people" in the National Council of Provinces (NCOP)

House Chairperson,
Hon Deputy Chairperson,
MECs and Executive Mayors,
Honourable Members of the NCOP,
The leadership of South African Local Government Association (SALGA),
Ladies and gentlemen.

Thank you for the opportunity to participate in this debate on: "Advancing the developmental agenda for a better life for our people."

At the launch Presidential Local Government Summit convened by President Zuma, almost a year ago, on 18 September 2014 it was stressed that local government is the primary point of delivery and it is where most citizens interface with government.

The vision of a developmental local government system was that it would be the building block on which the reconstruction and development of the country and society should be built, a place in which the citizens of South Africa could engage in a meaningful and direct way with the institutions of the state.

Similarly it was acknowledged that South Africa has made tremendous progress in delivering water, electricity, sanitation and refuse removal. These rates of delivery are unprecedented in recent world history.

Yet despite these delivery achievements, it is clear that much needs to be done to support, educate and where needed, enforce implementation to improve the performance of municipalities.

The Presidential Local Government Summit received a comprehensive analysis of the state of local government, drawing from various sources of credible data and information.

This analysis was summarised by the placing of all municipalities into three categories: “Doing well, Doing OK, and Dysfunctional” as per the realities of a municipality.

Our Back to Basics (B2B) assessment found that a third of municipalities are performing well, a third are doing OK, and a third are dysfunctional.

The B2B approach aims to move the dysfunctional municipalities out of this state over the next two years, consolidate the position of those that are doing well and advance the state of those doing OK. 

There are seven fundamental traits that define a “good municipality”:

  • Political and administrative stability;
  • Functional council and council structures and healthy political and administrative relations and interfaces;
  • An alignment of its spending profile and its Integrated Development Plan. Furthermore, their percentage of Capex spent, and the budget for maintenance and repairs are adequate to ensure adequate maintenance to prevent breakdowns and interruptions to services;
  • Sound financial management which is characterised by: consecutive clean or unqualified audit opinions, effective internal controls, a prudent spending profile, and successful revenue generation measures;
  • The delivery of services are consistent, and there is a continuous improvement of the quality of service rendered;
  • Sound institutional management, clear policy and delegation frameworks, capable staff, transparency, accountability and consequence management, and an intolerance of corruption; and
  • Consistent community involvement and a high community satisfaction record.

From the outset, B2B was conceptualised to be rolled out in phases. Highlights of the first phase can be summarised as follows:

At the Presidential Local Government Summit all present endorsed the Back to Basics approach and an Action Plan that was used as an  instrument to address the challenges, assign responsibilities and to create a platform for monitoring performance;

In October 2014, CoGTA initiated a monthly municipal reporting template comprising of a set of indicators as per the pillars of the Back to Basics approach against which municipalities must report to CoGTA. The objective behind the monthly reporting template is to institutionalise a performance management system that will recognise good performance, and ensure sufficient consequences and appropriate support for under performance.

The approach is integrating information on municipalities and ensures that the current challenges in the local government sphere, in the short to medium term specifically, are addressed;

Provincial Task Teams were establishment in all 9 provinces. Initially these teams verified and amplified the diagnostic assessments initiated by CoGTA, and there-after assisted in the development of municipality-specific action plans;

A number of provincial government B2B launches have taken place. These launches aim to get multi-stakeholder endorsement of the B2B approach, as well as the adoption of the various municipal action plans to address the challenges, assign responsibilities and to create a platform for monitoring performance. Getting the basics right will require leadership and commitment by all stakeholders and across government. The launches are at the forefront of mobilizing all sectors of society into the campaign to get back to basics;

Support and good governance packages were developed and implemented in a number of municipalities such as: Malamulele, Mogalakwena, Makana, Nelson Mandela Bay Metro, Buffalo City, and Oudtshoorn. A number of municipalities were placed under administration in terms of section 139 of the Constitution;

The B2B approach received a number of private sector support offers. These include offers by Telkom, Old Mutual, FNB, Banking Council, Huawei, Bain Consulting, etc.; and

The B2B approach needs now to move into a new phase during which the focus will be on the implementation of actions which will result in in an improved citizen experience of local government.

B2B is now well known and accepted. It has obtained traction within and outside of government, and has touched all 278 municipalities. The Constitution authorizes national and provincial executives to intervene in provincial administration and local government respectively within certain constitutional constraints. Interventions are initiated when a municipality cannot or does not fulfill executive obligations. During the initial phases of the B2B approach a number of successful interventions were undertaken e.g. in Mogalakwena.

The municipal monthly reporting system which was launched in October 2014 is progressively taking shape. Currently 158 municipalities are consistently reporting against B2B indicators on a monthly basis.

B2B is a standing agenda item in the PCC and MinMec where Premiers and MECs report regularly on the progress of the B2B approach in their respective provinces.

In acknowledgement of the diverse circumstances in each province, and the unique support needs of individual municipalities, varied provincial support approaches are emerging. Due to the directive inherent in the B2B approach that the people must be put first, ward-based planning and spatial mapping of APPs are being initiated in a number of municipalities.

The B2B financial monitoring tool that is being implemented provides for dedicated support to municipalities receiving disclaimers, as well as to those who owe Eskom millions of rands. Additionally, according to the municipal B2B reporting between October 2014 and February 2015, 122 municipal employees were dismissed for fraud and corruption.

A Metro Mayors Forum and a District WSA Forum were established to specifically deal with the unique circumstances that are experienced by metros and district municipalities who are Water services authorities.

Slowly but surely the impact of our B2B efforts are being felt. The most recent report on local government audit outcomes by the Auditor General shows a steady trend towards good governance and sound financial management.

Of our 278 municipalities, 148 (53%) now have unqualified audits - up from 120 (43%) last year. 198 (58%) of all 335 municipalities and municipal entities received unqualified audit opinions for their financial statements. This is up from 165 (49%) last year.

What is particularly significant is that 76% of the total local government expenditure of R315 billion is being spent by municipalities and municipal entities with unqualified audit opinions.

What this means is that almost eight out of every ten rands spent by local government is properly accounted for.

It is also encouraging that 96% of municipalities and municipal entities submitted their financial statements on time. This is an improvement over 93% in 2012-13 and a massive improvement from 78% in 2007-08.

All provinces showed improvement in their audit outcomes. The biggest contributors to the number of clean audits are Gauteng (13, or 39% of their auditees), KwaZulu-Natal (20, or 28% of their auditees) and the Western Cape (18, or 55% of their auditees).

Limpopo deserves a special mention. For 2012/13 only one of its 32 auditees received an unqualified audit. The others received qualified (19), adverse (3) and disclaimed (9) audits. This has improved dramatically to 15 unqualified audits for 2013/4.

These results were achieved through hard work, dedication, leadership and consistent hands-on engagement by, with and in municipalities.

Key lessons learnt from the initial phases of B2B

Political instability and weaknesses in governance are two of the primary causes of poor service delivery at municipal level. In certain instances the highest level of political intervention is required to resolve problems.

Municipalities with weaknesses in governance and corporate management functions such as financial management, HRM and SCM also tend to experience difficulties in service delivery. The processes and systems for citizen engagement are generally weak in municipalities categorized as dysfunctional and at-risk.

There is therefore a need for CoGTA to put in place a range of support packages for less capacitated municipalities. These support packages should have conditions attached to them which municipalities must meet, such as the obtainment of minimum internal capacity building requirements over time, otherwise they will not result in sustainable improvements in municipal performance.

The implementation of B2B thus far has highlighted the imperative of improving service delivery also requires the simultaneous implementation of actions. Therefore CoGTA must build better partnerships sector departments which have a key role to play in improving municipal performance.

From the work done to date, we have a good idea of what the key problems are. It is now time to focus on taking more effective action to address the problems.

This requires national and provincial CoGTA to:

  • Have a more hands-on approach;
  • Simultaneously address causes and symptoms: carry out deeper analysis of the underlying causes and symptoms of service delivery problems and focus on addressing these;
  • Better understand the levers for change and make better use of them; and
  • Prioritise and focus on the 20% of actions which will create 80% of the impact, using the available levers for change

I am sure that the NCOP visits across the country last month afforded you the opportunity to see that we are seized with ensuring that local government delivers.

We have taken note of the challenges identified during the NCOP visits. These include that of sound financial management and delivery of basic services, especially around water and sanitation that continue to bedevil some of our municipalities.

We have instituted a number of measures to ensure that we as Cogta, deal more effectively with these challenges. To that end we have completed the restructuring of the Department of Cooperative Governance with units now specifically dedicated to the Back to Basics.

We would like to report on action that we are taking to deal with some of the challenges raised in the provincial week report.

In the Western Cape we have resolved the impasse at the Oudtshoorn municipality and it has now been placed under administration. Ten municipalities have been identified and are being assisted by the B2B programme. These include those of Kannaland and Beaufort West, which were visited by the Honourable Members.

Action plans with clearly identified project were developed for these municipalities. The District Municipalities are being strengthened through the implementation of a Shared Service Models at 3 of its 5 District Municipalities, and the implementation of a Inter-Municipal Co-operation arrangement at one of the Districts, as a pilot.

We are aware of the challenges in the Northern Cape, especially with the number of dysfunctional municipalities. We have identified the issue of improperly qualified municipal managers as one of the areas that require our urgent attention. Acting municipal managers have been seconded to Dikgatlong, Phokwane, Mier and Nama Khoi while an acting municipal manager has been appointed at Renosterberg.

District Municipalities are being supported through the strengthening of business plans, and the reporting on the implementation of the Disaster Management and Fire Services grant; the appointment of skilled and competent senior managers; and increasing the capacity in the finance and technical sections to replicate assistance to locals.

We are heartened by the efforts of the leadership of the Mpumalanga province to improve service delivery at local government level. We commend the replacement of mayors in the four under-performing municipalities of Thaba Chueu, Emalahleni, Lekwa and Dr JS Moroka. We have taken note that a lack of effective public participation and basic service delivery challenges, especially in water and sanitation has hampered some municipalities in the province.

Interventions by the province include the development of complaints management systems in 16 municipalities. Of the 231 projects that were planned for implementation during 2014/15, 153 were Water and Sanitation projects to the value of R1 billion. A total of 107 water and sanitation projects are under construction, 46 are already completed and 99 881 households have benefited. Seventy-five percent of the Municipal Infrastructure Grant (R1,275bn) has been set aside to accelerate water and sanitation projects.

In North West nine high priority municipalities have been identified that require support in all key performance areas. We have invoked Section 139 (1) b in some of these municipalities, such as Matlosana, Ngaka Modiri Molema, Tswaing and Ventersdorp. This will bring stability to the council and administration, improve financial status, and improve the delivery of services.

Chairperson,

Theft and damage to infrastructure have devastating consequences for local government and the provision of basic services such as water, electricity, transport, and health.

Therefore we welcome the introduction of the Criminal Matters Amendment Bill 2015 as a further measure in government’s efforts to protect our nation's essential infrastructure from organised criminal activity.

The Bill introduced by the Minister of Justice proposes to criminalise the unlawful and intentional tampering with or damaging or destroying of essential infrastructure and provides for the imposition of severe penalties, up to 30 years imprisonment.

We urge the NCOP to give urgent attention to this legislation.

A working group consisting of Deputy Ministers of Cooperative Governance & Traditional Affairs, Police, Justice & Correctional Services, State Security, and Public Enterprises has also recommended:

(1) Tightening the regulation of scrap metal dealers by, amongst others: (a) limiting the number of licenses issued, (b) centralizing their registration nationally, (c) requiring the registration of export agents who buy from scrap metal dealers; (d) prohibiting export agents from buying from unregistered dealers; (e) prohibiting all payment in cash for scrap metal.

(2) Making it more difficult to obtain bail in cases involving the unlawful possession or illicit dealing in non-ferrous metals.

(3) That the Ministers of Trade and Industry and Economic Development and the National Commissioner of the South African Revenue Service consider measures to ensure that all containers containing scrap metal will be subjected to rigorous inspection in terms of the International Trade Administration Commission Act.

(4) That consideration be given to further measures including either a direct ban on all scrap metal exports for a period of time or the imposition of an export tax to decrease its commercial attractiveness and in this way reduce the demand for the collection of scrap metal which is feeding the theft of cable and metal.

All these recommendations have been accepted by the Presidential Infrastructure Co-ordinating Council (PICC).

Regarding municipal debt, we have met with the 20 top owing-municipalities, SALGA, National Treasury, Eskom. The meeting agreed on a clear action plan for the next six months.

National Treasury will continue working with municipalities that are persistently defaulting on payments to Eskom and water boards to ensure that they implement the necessary financial recovery plans.

We will also work with Eskom, NERSA, National Treasury, and SALGA to, amongst others:

  • Review the requirement that municipalities pay in a 15 day period rather than what is required in terms of section 65 of the Municipal Finance Management Act. This results in municipalities being charged unnecessary interest.
  • Review the penalties being imposed on municipalities for exceeding their reserve capacity.
  • Establishing an integrated tariff regulatory body that looks at the basket of municipal services holistically.

We will also take decisive action to ensure that national and provincial spheres of government settle their debts to municipalities - including consideration of withholding equitable shares. We are saying pay first, argue later.

We are also working with National Treasury and SALGA to review the funding formula for local government.

In conclusion, this debate takes place during Womens' Month. In a few days, on 9 August, we commemorate the bravery of the women who marched on the Union Buildings in 1956 to protest against the extension of the pass laws to African women.

On the 9th of August President Zuma will release a report on the status of women in South Africa. There is no doubt that we have made great strides over the last 21 years of democracy in improving the lives of women in our country. 

Prior to 1994, the South African Parliament had a mere 2,7% representation of women. Following the first democratic elections, women representation in the National Assembly stood at 27,7%. In 1999 that figure increased to 30% and then to 32.7% in 2004. After the 2009 national elections women representation reached 42%. Currently women ministers comprise 41% of the Cabinet, while women deputy ministers make up 47% of the total number of deputy ministers and there is a 41% representation of women in the National Assembly. As at 1st January 2015 South Africa was ranked at number 11 by the Women in Politics 2015 report, produced by UN Women and the Inter-Parliamentary Union.

The picture for local government is improving but needs to improve even more. In 1995, 19% of councillors were women, in 2000, this increased to 29%, and in 2006 this increased to 40%. Unfortunately this declined to 38% after the 2011 local government  elections.

The NGO Genderlinks says in a report on Gender in the 2011 local government elections that: "The ANC’s big achievement in the 2006 elections was not only to field 53 percent women candidates overall (of whom 46 percent won) but to substantially increase the proportion of women ward councillors to 40 percent of the total ANC ward councillors.

The upshot is that women ward councillors increased from 17 percent in 2000 to 38 percent in 2006 while PR councillors increased from 38 percent in 2000 to 43 percent in 2005 for an overall total of 40 percent (compared to 29 percent in 2000)."

We urge all parties to follow this example.

We commend the NCOP for the good work that it continues to do and we commit ourselves to continue walking the road of advancing the developmental agenda of local government for a better life for our people.

I thank you!

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