Q Mahlangu: Gauteng Local Government media briefing 2006

16 February 2006

TOWARDS SUSTAINABLE MUNICIPALITIES AND UNIVERSAL SERVICES BY 2010

INTRODUCTION

1. Five years ago, South Africa inaugurated a new system of local
government.
For the majority of the population it was the dawn of a new era, in which local
government would include them for the first time. Government put in place a
vision of municipal structures that would be both democratic and developmental,
and which would aim to fulfil local government's constitutional mandate to
create and sustain humane, equitable and viable human settlements.

2. This Local Government performance review is a comprehensive assessment
based on detailed empirical research on how Gauteng's local governments have
fared in the realisation of this vision during their first five years in
office.

3. While addressing the vast service backlogs that were the legacy of the
past, Gauteng's new municipal structures have also faced the challenges posed
by rapid urbanisation and in-migration, unleashed by the collapse of
apartheid's vision of a spatial segregation and the rising expectations of a
better life for all South Africans.

4. While significantly expanding their capacity to deliver a range of social
services, local government also had to re-create its own structures, capacities
and policy frameworks.

5. The Gauteng Department of Local Government is responsible for monitoring
and supporting local government in the Province and promoting the development
of local government capacity to enable municipalities to perform their
functions and manage their own affairs.

6. On the basis of empirical studies of the local government's achievements
and challenges over the last five years, the Review identifies the strategic
challenges that municipalities will face over the next five years. In doing so,
five key performance areas have been assessed:

I. Institutional Development and Transformation
II. Service Delivery and infrastructure development
III. Financial management and viability
IV. Democracy and good governance V. Local Economic Development and Growth

7. In addition to suggestion broad strategic direction for local government,
the Review also identifies a set of key indicators around each one of these
capacities. These indictors will be used to monitor the performance of
municipalities in the province over their next term of office.

INSTITUTIONAL DEVELOPMENT AND TRANSFORMATION

8. Between 1998 and 2000, Parliament enacted a number of statutes, which
entirely transformed the systems, institutions and processes of local
government. Key among these were the Municipal Structures Act (1998), the
Municipal Demarcation Act (1998), Municipal Systems Act (2000) and the Local
Government Elections Act (2000). The Municipal Finance Management Act of 2003
also redefined the financial framework for municipal operations.

9. A key challenge of the first local government term has been to bring the
new statutory framework into existence. From 51 municipal structures that
existed prior to 2000, 15 new authorities were created with new political
arrangements and new organisational systems.

10. While substantial progress has been made, some significant weaknesses
remain:

* In Gauteng, five municipalities have still not completed their
establishment process after five years in office (Metsweding, West Rand,
Emfuleni, Randfontein and Westonaria). This means that these municipalities
have not approved their organisational designs. Also the lack of performance
contracts for S57 managers in Emfuleni, Kungwini and Midvaal LMs requires
immediate attention.
* A second challenge is the large number of unfilled posts. There is a strong
correlation between the level of filled posts and service delivery achievements
of municipalities. Ekurhuleni indicated that almost 50% of posts were unfilled
in the last municipal financial year; while for Tshwane this was more than 30%
and Johannesburg 27%. Ekurhuleni's high level of unfilled posts may be
attributed to the recent completion of its establishment process. Randfontein
also indicates very high levels of unfilled positions over the last financial
year, while Emfuleni, Mogale City and Merafong also have more than 20% of posts
being unfilled for the year. In Sedibeng the figure is closer to 30%.
* Linked to the problem of unfilled posts are deficiencies in the professional
and technical skills that municipalities require to effectively execute their
capacities. The analysis of skills shortages by occupation for all the
municipalities indicates the greatest shortages in the technical and associated
professional categories (7,1%) followed by the professional (4,0%).

11. Despite these shortcomings, Local Government in Gauteng has largely
succeeded in realising the new institutional framework.

12. In the next five years, our focus must be to improve the quality and
effectiveness of those systems, especially in respect of integrated development
planning and performance management. These should become useful tools for
ongoing municipal management, service delivery and pro-active community
development, rather than legislative requirements to be fulfilled.

13. The next term must also address the critical challenge of attracting
technically proficient management to work in local government and building a
cadre of local government professionals. Related to the challenge of capacity
building is the need for ongoing skills development.

SERVICE DELIVERY AND INFRASTRUCTURE DEVELOPMENT

14. In terms of the Constitution, access to basic services is considered a
basic human right. Therefore all spheres of government are constitutionally
obliged to provide basic services to all citizens. To this end, the
government's free basic service programme is targeted towards the poorest of
the poor thus ensuring that the benefits of these services are derived by those
persons that are most in need.

15. The national government has set targets for the elimination of
infrastructure backlog and universal access in respect of basic services;
namely: water to all by 2008; sanitation to all by 2010; and electricity to all
by 2012. Although these are national targets, obligating various national
departments to carry them through, ultimately, municipalities are expected to
meet these targets and deliver these services to all citizens.

16. Municipalities in the province were, on inauguration in 2000, faced with
huge challenges regarding the provision of basic services and infrastructure
development. The Census 2001 recorded that there were 532 046 households with
below basic access to electricity, 68 514 households below basic access to
water and 164 101 households below basic access to sanitation. The Census 2001,
however, does not reflect on the households that had no access at all. It only
reflects below basic, intermediate and full access.

17. At the same time, Gauteng's population of 9,3 million people has been
rapidly growing. It is estimated by StatsSA that more than half a million
people have migrated to the province since 2001.

18. Significant progress has been made in expanding access to basic services
in the province. However, this has not occurred at a scale or pace that would
ensure the elimination of backlogs.

* There have been 181 827 new water connections in Gauteng between July 2001
and June 2005. However, in most municipalities the number of new connections in
the past five years is less than half of the backlogs estimated in 2001.
* In respect of sanitation, there were 80 552 new connections in Gauteng
between July 2001 and June 2005, but the province recorded a backlog of 164 101
household below basic access to sanitation in 2001 (excluding households with
no access at all).
* The picture in respect of electricity is similar. According to recent data
received from municipalities there were 80 238 new legal electricity
connections in Gauteng between July 2001 and June 2005.
* The local government review also quantifies backlogs in respect of community
infrastructure such as sports facilities, community halls, clinics, parks and
open spaces. Once again, while substantial progress has been made, enormous
challenges remain.

19. Clearly, municipalities in Gauteng have, collectively, been unsuccessful
in reducing 2001 municipal service backlogs by more than half. This is of
concern especially with regards to the metropolitan areas where two thirds of
the provincial population resides. Tshwane stands out as the most challenged
with regard to community services, while Johannesburg is most challenged with
regard to household services. To a large extent, this is explained by the
extent of in-migration, especially to the metros.

20. Urgent and significant action is required to change the trajectory of
municipal infrastructure roll-out if we are to realise the goal of universal
access by 2012. In order to eradicate the current backlog and also cater for
the anticipated population growth a substantial acceleration in the current
rate of implementation is needed 21. What is clear is that the current rate of
investment in municipal infrastructure by government is not adequate, if we are
to meet the targets of universal access within the stipulated timeframes.

22. In particular, more resources should be directed towards metros since
this will address the needs of two-thirds of the people in the province.

23. Realising our goals will not only require additional resources. Other
critical constraints will also have to be addressed. These include:

* Improving the institutional coordination of services, especially for
communities that require rapid improvement.
* Removing institutional constraints to the rapid deployment of new
infrastructure.
* Reviewing the impact of the legal and regulatory framework on timeframes for
delivery.

24. District municipalities have a very limited role in terms of service
delivery in the province, notwithstanding their allocated responsibilities.
Their role is largely limited to supporting local municipalities. From this
perspective, it is necessary to rethink the role that should be played by
district municipalities to add significant value to local governance in the
province.

FINANCIAL VIABILITY AND MANAGEMENT

25. Effective and efficient financial management is essential if service
provision is to be viable and sustainable. For a municipality to be considered
financial viable, it has to have quality financial management practices and an
ability to manage and maintain its financial resources in a way that fulfils
its mandate.

26. Gauteng's municipalities have made substantial progress towards
efficient and effective financial management and financial viability. Most
Gauteng municipalities are not grant dependent, thus giving them some
discretion in managing their finances, while the metros have been able to
access debt markets to fund capital expenditure. All Gauteng municipalities
have been able to meet commitments to creditors and most have been able to
spend their capital budgets.

27. However, data based on financial statements over the last five years
show that while metropolitan municipalities spent against all items within
their budget there was under expenditure of 21% for personnel costs, 13% in
relation of general expenses, 11% on repairs and maintenance and 4% on other
expenditure. The 21% under expenditure for personnel can be attributed to
unfilled posts, which affects service delivery and operational efficiency.

28. Also of concern are a number of disclaimers and adverse opinions issued
by the Auditor-General (AG) in respect of local governments, the details of
which are provided in the Review.

29. Based on the AG reports, there is also concern that the increasing
levels of debtors may undermine the liquidity of municipalities. The underlying
cause of this may be capacity to develop and implement viable cash collection
and billing system. Trained personal are not available to accurately record the
various transactions taking place as will as keep record of various assets.

30. As we begin the next term it will necessary to conduct a capacity and
systems audit with regard to the finance departments of the various
municipalities.

LOCAL ECONOMIC DEVELOPMENT

31. Municipalities in South Africa are currently the major role-players in
local economic development (LED), through the employment of local people,
procurement of goods and services, development of infrastructure and provision
of services.

32. LED is about promoting economic development and growth through
strategies that create conducive environments for investment: through
development of infrastructure; the promotion of small businesses and enterprise
development; the promotion of labour-intensive activities through the Expanded
Public Works Programme; and small, medium and micro enterprise (SMME)
initiatives, directing foreign and domestic investment to local areas,
increased involvement of local businesses in trade activities, etc.

33. Gauteng has a strong economic cluster of advanced producer services, and
indications are that the business and financial services sector will continue
to show the strongest growth in the Province's economy, and will dominate the
metropolitan economies of Johannesburg and Tshwane by 2009.

34. Despite this growth, the Province experiences a number of key
challenges, including high levels of unemployment and poverty as well as uneven
and skewed growth and development, which have resulted in some geographic areas
and some sections of our population benefiting from provincial successes more
than others have.

35. The restructuring of the economy has also had contradictory consequences
for across Gauteng's municipalities. Recent data reflect that the two mining
districts of Sedibeng and West Rand show drastic decline in economic
activities, reflecting the sharp contraction of employment, especially in the
gold mining sector on which these areas have been historically reliant.

On the other hand, the economies of the metropolitan areas have registered
growth in their Gross Geographic Product (GGP), as they benefit from the shift
to service sector activities.

36. Municipalities have adopted procurement policies that prefer SMMEs and
BEE as one mechanism to influence local economic development. There is a real
opportunity for municipalities to perform well in this area considering that
they implement capital projects in delivering infrastructure for services. In
addition, the Expanded Public Works Programme (EPWP) is being implemented as a
national programme to create short-term employment and develop skills of the
unemployed.

37. The challenge of successful LED requires a much greater degree of
integration of provincial local and national strategies.

38. Various pieces of data seem to indicate that a lot has been done and
achieved by municipalities. The challenge, however, is to build functional
monitoring systems that are able to keep track of short-term performance and
guide strategies toward achievement of longer-term outcome goals. It is
therefore important to set up proper monitoring systems linked to existing
initiatives on PMS to improve reporting and accounting on economic development
impact objectives.

DEMOCRACY AND GOOD GOVERNANCE

39. A responsive and people-driven municipal agenda can only be realised
through the active participation of local residents in the shaping of municipal
programmes and projects. Municipalities are therefore required to develop
effective community participation strategies to deepen democracy at local
level.

40. The ward-based system of getting views of different stakeholders in a
community is only one channel for community participation. Imbizos and IDP
hearings are also used, not only to assess community views on municipal
services, but also to obtain people's inputs into the budget and service
delivery targets and priorities.

41. Metropolitan municipalities seem to be performing well in terms of
public participation, ward committee establishment and institutional
governance. All three have between 95% and 100% ward committees established and
all collaborate through the SACN to share knowledge and learn from one
another.

42. Public participation in the affairs of municipal government has also
been achieved wherein municipalities have been able to include over 50% of the
stakeholders in participatory processes.

43. However, ward committees are not functioning in a uniform manner across
the province. Better resourcing and utilization of ward committees must become
a key component of our programme in the next term.

44. Also of concern has been the low levels of voter turnout in the last
municipal elections. While turnout is generally lower than for national
elections, the turnout in Gauteng is particularly low.

45. While municipalities have completed their delegation systems, completed
their terms of reference for political structures and office bearers, it is
important to note that there are more committees reporting to the Mayor
(section 80 committees). The issue for the next term is to establish more
section 79 committees as these reports to Council and thus could strengthen
Council oversight over the executive. The issue of a separation of powers at
the local government level needs to be addressed and section 79 committees are
one way of doing so.

46. District-local IGR structures exist in some parts of Gauteng. However,
they need to entrench collaboration and build the relationship between district
and local municipalities. It is believed that the newly promulgated IGR
Framework Act will address this concern in the next term.

47. One of the lessons of the Citizen Satisfaction Survey is that there is
discrepancy between what citizens expect from councillors and what they
actually do. The issue is not so much whether councillors begin to embrace the
role expected by the citizenry, but the most important thing is at least
communicate the role to the citizenry, so as to avoid confusion and enhance
accountability.

48. Another challenge is to begin to think and craft a clear role for PR
councillors. The newly defined would have to be understood not only by PR
councillors and fellow councillors but also by the citizenry at large.

CONCLUSION: MEETING THE CHALLENGE OF SUSTAINABLE LOCAL GOVERNMENT AND
UNIVERSAL ACCESS BY 2010

49. The Local Government Review identified the following key challenges that
will face local government over the next five years. These include:

* Legacy of apartheid planning, fragmented spatial environment;
* Basic services and infrastructure backlogs;
* Stagnant and declining economies (e.g., mining sector);
* Population growth & In-migration;
* High rate of unemployment and poverty;
* The HIV and AIDS pandemic;
* Difficulties of preparing the Integrated Development Plans (IDPs);
* The amalgamation & transformation of local government structures;
* Municipal Debt and Revenue Management

50. Whereas the new pieces of legislation were intended to enable
municipalities to more effectively address the above-mentioned developmental
challenges, these legislative changes have also resulted, in varying degrees,
in additional complexities and demands on municipalities.

Consequently, many municipalities are still grappling with legislative
compliance issues in the context of some administrative and management capacity
limitations. These complexities include:

* Lack of co-ordination and integration where there are common areas of
competence functions and programmes;
* Lack of capacity within local government (financial, staff and skills) to
perform authorised functions effectively;
* Municipalities' current functions significantly transcends Part B of the
Schedules in the Constitution;
* Municipalities performing authorised functions mainly in 'urban' areas, and
not in 'rural' areas;
* Policy directives with financial implications exceed fiscal capacity and
power, resulting in 'unfunded mandates';
* Interconnectedness of some of the functions listed in Schedules 4 and 5
(Parts A and B) are at times unclear, create confusion and some do not
necessarily reflect the 'developmental role' of municipalities.

51. The challenges are of a nature that requires increased co-ordination and
co-operative governance between all three spheres of government, both at a
political and administrative level. Some of the measures that have already been
decided at an inter-governmental level are listed below. These must be taken on
board in the development of local government plans for the next term.

* Increased integrated spatial and economic development planning between the
three spheres of government
* Strengthening and improving current IGR mechanisms, and if necessary
establishing new ones e.g. appropriate co-governance, signed co-operation
agreements and pooling of resources and information between the three spheres
of government; ensuring that integrated infrastructure development is discussed
at all necessary inter-governmental structures on a regular basis.
* Local government socio-economic targets to be based on those in the
Provincial Growth and Development Strategy
* Joint implementation of the Declaration of the Province's Intergovernmental
Infrastructure Summit
* Strengthening coordination and integration between GPG and municipalities at
political and administrative/operational level
* The consolidation and concentration of resource allocations for intervention
in poverty-pockets
* Joint planning for the joint GPG and local government investment of about R50
billion over the next five years for infrastructure development across the
Province
* Facilitate alignment between the provincial and municipalities'
infrastructure projects, and of their budgets for these projects.
* Ensure that MIG and EPWP methodology are aligned to each other
* More clearly defined operational "delegation" and responsibilities in respect
of concurrent powers and functions
* Coherent rationalisation and uniform interpretation of existing policies and
legislation to extract clearly defined role and functions
* Amending of current legislation if required, to address blockages and bottle
necks that may be the result of legislation rather than admin systems
* Political decision required on the need and role of district councils which
may require legislative review
* Clearly define, in terms of the current legislative set-up, what districts
can do to add value to their local municipalities and improve co-ordination
between districts and local municipalities

Key interventions to act on the findings of the Review as well as to ensure
that Premier's commitments are met by the Department of Local Government.

1. Institutional Development and Transformation.

1.1. The Department has noted the fact that there are still municipalities
that have not completed their establishment processes and will therefore
provide support to ensure that these processes are completed within this
calendar year.

1.2. The Department will also work with municipalities to ensure that funded
vacant posts are filled as soon as possible. An issue that will receive
priority attention is the large number of vacant posts of municipal manager
which stands at 5 out of the 15 at this stage. It is also expected that a
number of current municipal managers’ posts will be coming to the end of their
contract periods immediately after the elections. Indications are also that a
significant number of senior managerial posts are likely to reach the end of
their contract periods within this year. The Department therefore eagerly
awaits the finalisation of the local government competency framework and looks
forward to the regulations on the appointment, performance and evaluation of
municipal managers and other senior managers. The Department is considering an
offer to ensure that all prospective municipal managers and senior managers are
subjected to a rigorous competency assessment prior to being offered the posts
of municipal managers.

1.3. DLG has also finalising plans to ensure that all project management
units responsible for MIG implementation will be put through a comprehensive
and intensive project management programme. The training opportunity will be
extended to all managers involved in project management.

2. Service Delivery and Infrastructure Development

2.1. The Department has developed strategies to ensure that communities have
universal access to water, sanitation and electricity by 2008, 2010 and 2012
respectively over the last 12 months. These draft strategies will be tabled at
electricity and water/sanitation summits to be held before June this year. The
electricity summit will also focus on the establishment of the REDs in
Gauteng.

2.2. The eradication of the backlogs will require a whole of government
approach in terms of co-ordination and funding. The announcements by the
President and the Premier on the importance of tackling the infrastructure
challenges in a manner that creates jobs and also develops SMEs.

2.3 The Premier's commitment that all roads in the 20 major townships of
Gauteng will be tarred by 2009 is another priority area that the department
will focus on. We will ensure that municipalities target the MIG funding to the
basic infrastructure needs of these areas.

2.3. The recent floods in Gauteng has emphasised the importance of disaster
management services in Gauteng. To ensure that Gauteng is ready to meet the
challenges posed by such disasters and others, a Provincial Disaster Management
centre will be established by the end of this year.

2.4. The census figure of 2001 indicated that there were 60 000 identified
bucket type toilet systems in operation in Gauteng. This figure has been
reduced to about 2 500. We are confident that we will have eradicated this
problem by June of this year.

2.5. The Department will also commence work on the development of a
provincial sanitation strategy to ensure that the citizens of Gauteng have
access to decent sanitation which also meets the norms of a rapidly developing
urban area.

2.6. To ensure that municipalities have the required skills to carry out
their service delivery obligations the Department will roll out technical
support programme, aimed at placing engineers, project managers and chartered
accounts in municipalities that require them. This programme has already
started with the first 70 being deployed to various municipalities across
Gauteng. This is part of Project Consolidate, a hands-on approach to assist
municipalities.

3. Financial Viability and Financial Management

3.1. The recently established Financial Advisory Commission will focus on
the following :

* The Commission will assess the state of finances in municipalities and
come up with strategies to address key financial challenges.
* The focus will be on financial management (Audit Reports); Financing
arrangements (Borrowing); Revenue management (Billing/Debt management/Credit
control); and MFMA compliance.

The target is to ensure that by 2009 all municipalities receive clean audit
opinions from the Auditor-General.

3.2. The Department will be focusing on the issue of water losses at
municipal levels. It is estimated that municipalities lose almost R1.9m a day
to water losses. Where this problem has been tacked such as in Emfuleni it has
brought about significant savings, which has been redirected to other service
delivery priorities. This strategy will be rolled out in a phased manner.

3.3. The Department will also ensure that municipal budgets are focused on
the priorities of service delivery and will ensure that all draft budgets are
subjected to a level of scrutiny that achieves this objective.

3.4. Strategies to deal with municipal debt will have to be developed. The
R15-billion owed to municipalities in this province is a cause for major
concern. The Department will monitor very closely councillor arrears as well as
government debt to municipalities. All indications are that most municipalities
have sorted out their billing systems and are now in a position to accurately
bill customers for services rendered.

3.5. Municipalities will also be supported in the roll out of the Property
Rates Act effectively.

4. Democracy and Good Governance:

4.1. Increased emphasis will be placed on mechanisms to improve community
participation at municipal levels. The Department will ensure that there is
effective training for ward committees.

4.2. The placement of at least one CDW in each ward by the end of the
financial year should provide ward committees and ward councillors with
additional capacity to ensure that this participatory structure works
effectively. It should also assist in ensuring that service delivery issues are
attended to speedily by all levels of government. The CDWs should also bring
about a higher level of awareness of government services and products.

4.3. Work will be undertaken with all municipalities to ensure that they
have effective communication strategies in place and that these are adequately
resourced.

4.4. A lot of work has been done on reviewing the powers and functions as
they pertain to provincial and local government in Gauteng. The report and
clear proposals will be made at the next meeting of the Premiers Co-ordinating
Forum. This report will form the basis for Gauteng’s contribution to the
National process which will culminate in a report, by DPLG to the July 2006
Cabinet Lekgotla.

4.5. The role and functions of District Councils will also receive
considerable attention in this year. The review points to significant
weaknesses at this level. The focus will be on ensuring that the District and
its local councils play their respective roles and that each tier be supported
to effectively execute their respective mandates. The implementation of the
Intergovernmental Relations Framework Act is an imperative at the District
level and support will be provided in this regard.

These are some of the key actions that the Department will be focusing on in
the next financial year. More detailed elaboration of these plans will be made
during the course of the next few months and during the budget vote speech of
the Department.

For more information contact: Themba Sepotokele
Tel: (011) 355 5111

Issued by: Department of Local Government, Gauteng Provincial
Government
16 February 2006