L Msengana-Ndlela: Parliamentary media briefing, February 2006

8 February 2006

Matters Arising with regard to Local Government Transformation

The first term of democratic local government from 2000 to 2005, has proven
to be one of the most complex projects of state transformation since 1994. The
tasks of local government transformation are complex and require a systematic
approach to capacity building. We have undertaken a qualitative assessment of
local government transformation in South Africa since December 2000. As the
President indicated:

“For Accelerated and Shared Growth Initiative of South Africa (ASGISA) to
succeed, it is clear that the machinery of state, and especially local
government, should function effectively and efficiently. During the past year,
our government has undertaken a detailed assessment to determine what we need
to do to improve the capacity of our system of local government.” President T
Mbeki, State of the Nation Address, 3 February 2006

This assessment recognises progress and challenges of the past five years,
but is mainly forward looking in character, taking into account recent lessons
from Project Consolidate. It addresses the key question: “What must be done
with regard to local government in the next five years (2006 – 2011)?”

Informed by the benchmarks we have set for our municipalities over the next
five years, three overarching strategic priorities for local government will be
implemented in the next five years. These are indicated and will be discussed
in turn.

These priorities constitute a combination of (a) mainstreaming our practical
hands-on support to all municipalities; (b) strengthening and re-positioning
our structural and governance arrangements with regard to how we interact with
local government and (c) refining the local government policy environment and
giving more attention to enforcement of the law.

Strategic Priority No. 1: Mainstreaming hands-on support to Local
Government

What does mainstreaming mean?

A functional municipality must have particular characteristics as we propose
in the Framework for Key Performance Areas (KPAs) and Key Performance
Indicators (KPIs). Mainstreaming hands-on support to local government must mean
undertaking specific tasks and actions by national and provincial government,
state-owned enterprises (SOEs) and our key stakeholders in a manner that is
reflected in the core business and organisational processes of these
institutions.

This is why we will be introducing specific measures to:
i. Address the differential capacities of the municipalities;
ii. Focus on time-bound outcomes;
iii. Emphasise the roles of national departments and provincial government;
and
iv. Enforce Monitoring and Evaluation Mechanisms.

What must be achieved with local government and through Local Government by
2011?

South Africa should have a viable system of local government focused on
service delivery and development. The local sphere must enable government to
meet its obligations by 2011 and be on course towards meeting the 2014 targets.
These targets include halving poverty and unemployment. The facilitation of
local government engagements with planning processes (Integrated Development
Plans (IDPs) and Local Economic Development (LED), must be undertaken within
the context of Government’s obligations.

What are the most immediate actions that will be undertaken?

Specific high level priority actions have been identified to give effect to
mainstreaming hands-on support to local government. All the relevant national
and provincial departments will report to the July 2006 Cabinet Lekgotla
through the relevant clusters on the progress they have made with regard to
these priority actions.

First, key service delivery national and provincial departments must reflect
concrete support actions to municipalities in their Strategic and Business
Plans and streamline their support operations to local government. Key service
delivery national departments will provide appropriate resources to the
relevant provincial departments who are working closely with
municipalities.

Second, provincial governments must prioritise their local government
support by including the key tasks in their Provincial Growth and Development
Strategies (PGDSs) and through the Office of the Premier, utilise the Premiers
Coordinating Forum for co-ordinating and monitoring support to local
government. The provincial Premiers will present details on these tasks as they
open the relevant legislatures in the next ten days.

Third, the DPLG and within the context of the Governance and Administration
(G&A) Cluster, must continue to nationally co-ordinate, facilitate, direct
and monitor the priority hands-on support actions of national government to
local government. This department will improve its own institutional
arrangements and capability and identify, for government as a whole, the
priority support actions to be directed to the local government sphere.

Next, the South African Local Government Association (SALGA) has a critical
role to play in strengthening and supporting the municipal political
leadership. It will do so by rolling out a structured programme of capacity
building, stabilising the political and administrative components of
municipalities. This will be done in partnership with the DPLG.

Fifth, the support actions to local government must be informed by the
concrete actions identified in the revised IDPs. A national series of
orientation sessions with Mayors will be convened immediately after the March
2006 municipal elections. The primary purpose will be to sensitise Mayors to
critical national development priorities as they relate to local government and
their leadership responsibilities. This will be followed by a practically
focused induction programme for councillors and senior municipal managers.

Finally, building the technical capacity and capability of municipalities
through the mobilisation and deployment of appropriate technical expertise will
be short to medium-term priority. As we seek to integrate and co-ordinate our
work better, we also propose that we identify broad roles and responsibilities
of national and provincial government departments that must lead the
implementation of the priority actions.

There is therefore a need to focus on very specific priority actions in each
of the five Key Performance Areas of local government transformation:

* Municipal Transformation and Institutional (Capacity) Development;
* Improving Basic Service Delivery and Infrastructure Investment;
* Improve Local Economic Development;
* Improvement of Financial Viability and Financial Management and
* Strengthening Good Governance, Community Participation and Ward Committee
Systems.

Municipal Transformation and Institutional (Capacity) Development (KPA
1):

First, the key entry point to addressing challenges related to this KPA will
be for national and provincial government to support District and Metropolitan
municipalities to prepare IDPs in preparation for the adoption of the
respective budgets by June 2006. Second, priority will be the simultaneous
process of supporting municipalities to establish the core basic municipal
systems as required by law. Third, a more effective performance management
system in local government will be enforced. This is also linked to the crucial
work on the local government competency framework that must be finalized by
July 2006. The finalisation of the local government competency framework that
has been developed will focus on amongst other things, improving the regulatory
environment by issuing regulations on the appointment, performance and
evaluation of Municipal Managers together with other Senior Managers. Attention
will also be given to support by national government to municipalities as they
fill vacant municipal and senior manager posts.

Improving Basic Service Delivery and Infrastructure Investment (KPA 2):

National and provincial government together with key SOEs will provide
maximum support in ensuring that key service delivery targets are achieved in
the areas of water, sanitation, electricity and housing. In this regard the
development of a strategy on Municipal Infrastructure Development and sector
master plans will be important. The national Inter-Ministerial Committee on
Infrastructure Investment supported by the Director-General’s Municipal Task
Team (MITT) will co-ordinate these interventions.

The implementation of the national Municipal Infrastructure Investment
Strategy and the sector master plans will be accompanied by hands-on support to
less capacitated municipalities, the re-aligned (previous cross-boundary)
municipalities and the 21 urban and rural nodes. Other specific components will
include the mobilisation of a pool of engineers and project managers;
developing workplace programmes and engaging with tertiary academic
institutions to meet the technical skills requirements of municipal
infrastructure development.

Improve Local Economic Development (LED) (KPA 3):

National and provincial government will support all district and
metropolitan municipalities to prepare implementable LED Strategies.
Simultaneously, provinces will support these municipalities by prioritising LED
interventions in their Provincial Growth and Development Strategy. The draft
LED Framework prepared by the DPLG will be finalised and implemented rigorously
in alignment with the ASGI-SA. A number of focus areas have been identified. We
also need to emphasise that the support actions of government must give
particular attention to the areas of development potential identified in the
National Spatial Development Perspective (NSDP).

The question of local capacity to prepare and implement LED strategies will
receive attention. The deployment of development economists and planners will
be prioritised. Work is currently being undertaken with the Development Bank of
Southern Africa (DBSA) to mobilise the required skills and expertise.

All our efforts will seek to strengthen national co-ordination capability
for long-term economic development planning. As we do this there needs to be a
particular appreciation of the unique role that urban municipalities play in
contributing to the national economy and should play regarding promoting Local
Economic Development. For example, we know that the 9 largest cities account
for 63% of the total gross domestic product (GDP) of the country. Specific
interventions in our predominantly urban municipalities should focus on making
urban land markets work for the poor and promoting more competitive city
business environments.

Improvement of Financial Viability and Financial Management (KPA 4):

Clearly the financial viability and financial management of our
municipalities is central to building sustainable and effective municipalities
in the next 5 years. First, national and provincial government, working
together with National Treasury and DPLG, will provide financial management
hands-on support to low capacity municipalities and those municipalities that
are consistently receiving negative audit opinions from the Auditor-General, in
particular. Linked to this should also be the provision of appropriate support
to the erstwhile cross- boundary municipalities.

Second, a challenge that is common across government is the need to improve
our capacity to account for public resources and support all programmes that
are designed to improve governance and fight corruption. Continued support to
implement the Local Government: Municipal Finance Management Act (MFMA), 2003
will be an important element in improving the ability of municipalities to
manage public resources.

Third, the finalisation and stabilisation of the local government fiscal
system will be a priority in the next five years. This must include a
particular focus on ensuring that the Local Government Equitable Share (LGES)
and other municipal grants continue to be focused on benefiting our poorer
municipalities and those with a low fiscal capacity and that we improve
efficiencies based on the revenue raising capacity and potential of
municipalities.

Key sector reforms that may impact on the local government fiscal system
must be implemented, such as the Regional Electricity Distributors (REDS). This
refinement could also include the considerations of fiscal powers and
functions, specifically with regard to district and local municipalities.

Strengthening Good Governance, Community Participation and Ward Committee
Systems (KPA 5):

Notwithstanding an eighty percent (80%) plus establishment rate of ward
committees in the country, there are a range of challenges that characterise
the system of community participation in municipalities. These include the
non-functionality of some Ward Committees; some are not being adequately
utilized to enhance public confidence and participation in service
delivery.

From 2006 an intensive national programme to improve mechanisms for
community participation will be undertaken. This programme will create
opportunities for Premiers, Mayors and Ward councillors to lead public
participation processes that are characterised by direct contact and dialogue
with communities. The objective of this must strengthened social mobilisation
in our provinces and municipalities. At municipal level, specific support will
be provided to the Municipal Speaker’s Offices with the intention of increasing
their capacity to assist and coordinate the work of Ward Councillors and Ward
Committees.

Handbooks on Ward Committees will be launched on the 10 February 2006 and
that training on Ward Committees for councillors will be rolled out soon after
the 1 March 2006 elections.

It is important to recognise that social mobilisation is not the exclusive
responsibility of government and municipalities. The development of support
programmes with non-governmental organizations (NGOs) and key development
agencies to improve the mobilisation of social capital will receive more
attention.

Strategic Priority No. 2: Addressing the Structure and Governance
Arrangements of the State in order to better Strengthen, Support and Monitor
Local Government

Addressing the structure and governance arrangements of the State will be
achieved by stabilising and strengthening the inter-governmental system, so as
to benefit local government, principally through implementing the
Inter-governmental Relations (IGR) Framework legislation.

In parallel, a review will be undertaken on the structure and role of
provincial governments with regard to supporting and monitoring municipalities.
This will include an assessment on their capability to play an effective role
in supporting, implementing and overseeing national development priorities in
general. This review will also be informed by a number of considerations,
particularly but not limited to the lessons arising from doing away with
cross-boundary municipalities.

With regard to provincial departments of local government, an assessment
undertaken by the DPLG, points to a number of significant weaknesses in these
departments. What is evident is that there is no blueprint for the role of
provincial departments of local government, little correspondence between the
size of a province, the number of municipalities and the budget of these
departments and a poor match between organisation and statutory functions. The
capacity of these provincial departments responsible for local government will
have to be significantly improved to position them better in undertaking their
co-ordination role.

Strategic Priority No. 3: Refining and Strengthening the Policy, Regulatory
and Fiscal Environment for local government and giving greater attention to the
Enforcement Measures

There are two legs to this strategic priority. First, there is a need to
give greater attention to enforcing existing provisions of local government
legislation. An example of this is the mandatory reporting requirements on the
performance of municipalities by provinces and by the municipalities
themselves. The second leg is to prioritise the refinement of the local
government policy, regulatory and fiscal regime based on 5 years of
practice.

Four areas have been identified for such refinement:
* Planning for growth and development;
* Distribution of Powers and Functions across the State and Asymmetrical
Assignment to Local Government;
* Two-Tier System of Local Government; and
* Ward Committees and Community Participation.

The first policy refinement area focuses on planning for growth and
development. Achieving high levels of economic growth and sustainable
development in South Africa will depend on, amongst other things, constituting
a shared vision across government on how each of the 53 district and
metropolitan areas should be positioned in relation to provincial and national
challenges and priorities. Improved alignment of development planning regime
across government will therefore be critical.

The strengthening and rationalising of development planning across
government must be an important priority in the next local government term.
Areas requiring specific attention will include, and should not be limited to,
improving the planning capacity of all levels of government, rationalizing the
national responsibility and location for development planning and gradually
evolving the National Spatial Development Perspective (NSDP) into a stronger
and more directional and enforceable national development planning
instrument.

The second policy refinement area focuses on the distribution of powers and
functions across government and related matters of assignment and devolution to
local government.

A number of proposals are being developed for further discussion within
government and with relevant stakeholders. The proposals include developing a
national strategy setting out a policy and conceptual framework for
distributing powers and functions across the State; developing guidelines to
standardise definitions for schedule four and five functions and progressively
allocating greater responsibilities to secondary cities. A progress report in
this regard will be submitted to the July 2006 Cabinet Lekgotla.

The third policy refinement area focuses on the two-tier system of local
government. The White Paper on Local Government (1998) envisaged districts
playing a co-ordinating and development facilitation role, with locals
responsible for major service provision, unless the latter lacked the capacity
to do so. With certain exceptions, two-tier local government in
non-metropolitan areas require attention. The experience of the 2005 IDP
Hearings confirmed that the relationship between district and local
municipalities must be improved.

A key priority in the second term must thus focus on stabilising the
two-tier system of local government by, amongst other things, supporting the
implementation of the Inter-governmental Relations Framework in the context
District and Local Municipalities. This will entail defining the District
development facilitation and coordination functions and developing proposals on
a “district shared service model” that could be utilised for the benefit of
local municipalities.

The fourth policy refinement area focuses on ward committees. Current
legislation, i.e. the Local Government: Municipal Structures Act, 1998 makes it
discretionary for municipalities to adopt the ward committee system of
community participation. This has contributed to the uneven establishment rate
and levels of functionality of ward committees across the country. It will be
necessary that the relevant legislation be amended to make it mandatory for all
municipalities to adopt the ward committee system in order to deepen community
participation.

Conclusion

In conclusion, the improvement that will be made in the quality of capacity
building, must be aimed at working towards the benchmarks we have set for a
viable, functional and sustainable system of Local Government.

In answering the question, “What should be achieved with and through local
government in the next 5 years?” The response must be that we have functional
municipalities and that this sphere would have assisted South Africa in
achieving service delivery and development targets.

We call upon all South Africans to join hands with government and play an
active role in strengthening our system of local government.

Thank you.

Issued by: Department of Provincial and Local Government
8 February 2006
Source: Department of Provincial and Local Government (http://www.dplg.gov.za)